- Total revenues increased 20.3% to
$1.2 billion , with System-wide sales up 16.1% to$1.4 billion - Income from operations margin of 2.3% and Restaurant level operating profit margin of 18.5%
- Net income of
$19.4 million and Adjusted EBITDA of$120.9 million - 64 system-wide restaurants opened across 23 states
“2025 was a year of significant progress on a number of fronts for First Watch. In addition to continuing our industry-leading new restaurant growth of nearly 11%, we increased total revenues by more than 20%, which included same-restaurant sales growth of 3.6% and positive same-restaurant traffic,” said
Highlights for Q4 2025 compared to Q4 2024
- Total revenues increased 20.2% to
$316.4 million in Q4 2025 from$263.3 million in Q4 2024 - System-wide sales increased 16.1% to
$353.1 million in Q4 2025 from$304.1 million in Q4 2024 - Same-restaurant sales growth of 3.1%
- Same-restaurant traffic growth of negative 1.9%
- Income from operations increased to
$9.0 million in Q4 2025 from$3.9 million in Q4 2024 - Income from operations margin increased to 2.9% in Q4 2025 from 1.5% in Q4 2024
- Restaurant level operating profit* increased to
$59.6 million in Q4 2025 from$49.0 million in Q4 2024 - Restaurant level operating profit margin* increased to 19.0% in Q4 2025 from 18.8% in Q4 2024
- Net income of
$15.2 million in Q4 2025 compared to Net income of$0.7 million in Q4 2024 - Adjusted EBITDA* increased to
$33.7 million in Q4 2025 from$24.3 million in Q4 2024 - Opened 13 system-wide restaurants (12 company-owned and 1 franchise-owned) across 11 states
________________________
*See Non-GAAP Financial Measures Reconciliations section below.
Highlights for 2025 compared to 2024:
- Total revenues increased 20.3% to
$1.2 billion in 2025 from$1.0 billion in 2024 - System-wide sales increased to
$1.4 billion in 2025 from$1.2 billion in 2024 - Same-restaurant sales growth of 3.6%
- Same-restaurant traffic growth of 0.5%
- Income from operations decreased to
$27.5 million in 2025 from$38.9 million in 2024 - Income from operations margin decreased to 2.3% in 2025 from 3.9% in 2024
- Restaurant level operating profit* increased to
$224.1 million in 2025 from$201.8 million in 2024 - Restaurant level operating profit margin* decreased to 18.5% in 2025 from 20.1% in 2024
- Net income increased to
$19.4 million in 2025 from$18.9 million in 2024 - Adjusted EBITDA* increased to
$120.9 million in 2025 from$113.8 million in 2024 - Opened 64 system-wide restaurants (55 company-owned and 9 franchise-owned) across 23 states resulting in a total of 633 system-wide restaurants (560 company-owned and 73 franchise-owned) across 32 states
________________________
*See Non-GAAP Financial Measures Reconciliations section below.
Outlook Fiscal Year 2026
The Company provides the following outlook for the 52-week fiscal year ended
- Same-restaurant sales growth to be between 1% to 3%
- Total revenue growth of 12%-14%(1)
- Adjusted EBITDA* in the range of
$132 million to$140 million (1) - Total of 59 to 63 new system-wide restaurants, not including 3 company-owned restaurant closures (53 to 55 new company-owned restaurants and 9 to 11 new franchise-owned restaurants)
- Capital expenditures in the range of
$150.0 million to$160.0 million invested primarily in new restaurant projects and planned remodels
The Company reiterates its long-term annual financial targets as follows:
- Percentage unit growth in the low double digits
- Same-restaurant sales growth of ~3.5%
- Restaurant sales growth in the mid-teens
- Adjusted EBITDA percentage growth in the mid-teens
The Company continues to see a long-term opportunity for more than 2,200 restaurants across
______________________
(1) Includes net impact of approximately 1.0% in total revenue growth and approximately
*We have not reconciled guidance for Adjusted EBITDA to the corresponding GAAP financial measure because we do not provide guidance for the various reconciling items. We are unable to provide guidance for these reconciling items because we cannot determine their probable significance, as certain items are outside of our control and cannot be reasonably predicted due to the fact that these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measure is not available without unreasonable effort.
Conference Call and Webcast
Interested parties may listen to the conference call via any one of two options:
- Dial 201-389-0914, which will be answered by an operator
- Join the webcast at https://investors.firstwatch.com/news-and-events/events
The webcast will be archived shortly after the call has concluded.
Definitions
The following definitions apply to these terms as used in this release:
System-wide restaurants: the total number of restaurants, including all company-owned and franchise-owned restaurants.
System-wide sales: consists of restaurant sales from our company-owned restaurants and franchise-owned restaurants. We do not recognize the restaurant sales from our franchise-owned restaurants as revenue.
Same-restaurant sales growth: the percentage change in year-over-year restaurant sales (excluding gift card breakage) for the comparable restaurant base, which we define as the number of company-owned First Watch branded restaurants open for 18 months or longer as of the beginning of the fiscal year (“Comparable Restaurant Base”). For the year ended 2025, this operating metric compares the 52-week periods ended
Same-restaurant traffic growth: the percentage change in traffic counts for the 52-week period ended
Adjusted EBITDA: a non-GAAP measure, is defined as net income before depreciation and amortization, interest expense, income taxes and items that the Company does not consider in the evaluation of its ongoing core operating performance.
Adjusted EBITDA margin: a non-GAAP measure, is defined as Adjusted EBITDA as a percentage of total revenues.
Restaurant level operating profit: a non-GAAP measure, is defined as restaurant sales, less restaurant operating expenses, which include food and beverage costs, labor and other related expenses, other restaurant operating expenses, pre-opening expenses and occupancy expenses. Restaurant level operating profit excludes corporate-level expenses and other items that we do not consider in the evaluation of the ongoing core operating performance.
Restaurant level operating profit margin: a non-GAAP measure, is defined as Restaurant level operating profit as a percentage of restaurant sales.
About First Watch
First Watch is the leading Daytime Dining concept serving made-to-order breakfast, brunch and lunch using the freshest ingredients available. Guided by its “Follow the Sun” culinary philosophy, First Watch’s chef-driven menu rotates multiple times per year to feature the highest-quality flavors at their peak, offering elevated executions of classic favorites, fresh juices like the Kale Tonic, and fan favorites such as the Lemon Ricotta Pancakes, Quinoa Power Bowl and signature
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to known and unknown risks, uncertainties and other important factors that may cause actual results to be materially different from the statements made herein. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial position, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to any historical or current facts. These statements may include words such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “future,” “intend,” “outlook,” “potential,” “project,” “projection,” “plan,” “seek,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other similar expressions. You should evaluate all forward-looking statements made in this press release in the context of the risks and uncertainties disclosed herein, in our Annual Report on Form 10-K, including “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our other filings with the
Investor Relations Contact
941-500-1918
investors@firstwatch.com
Media Relations Contact
407-864-5823
jglester@firstwatch.com
Non-GAAP Financial Measures (Unaudited)
To supplement the consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in
Adjusted EBITDA and Adjusted EBITDA Margin
Management uses Adjusted EBITDA and Adjusted EBITDA margin (i) as factors in evaluating management’s performance when determining incentive compensation, (ii) to evaluate the Company’s operating results and the effectiveness of our business strategies, (iii) internally as benchmarks to compare the Company’s performance to that of its competitors and (iv) to provide investors with additional transparency of the Company’s operations. The use of Adjusted EBITDA and Adjusted EBITDA margin as performance measures permit a comparative assessment of the Company’s operating performance relative to the Company’s performance based on the Company’s GAAP results, while isolating the effects of some items that are either nonrecurring in nature or vary from period to period without any correlation to the Company’s ongoing core operating performance.
The following tables reconcile Net income and Net income margin, the most directly comparable GAAP measures, to Adjusted EBITDA and Adjusted EBITDA margin for the periods indicated:
| FOURTH QUARTER | |||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||
| Net income | $ | 15,164 | $ | 699 | $ | 2,648 | |||||
| Depreciation and amortization | 20,656 | 15,755 | 12,231 | ||||||||
| Interest expense | 4,795 | 3,219 | 2,271 | ||||||||
| Income taxes | (10,744 | ) | 39 | 2,857 | |||||||
| EBITDA | 29,871 | 19,712 | 20,007 | ||||||||
| Stock-based compensation, net of amounts capitalized(1) | 2,834 | 2,131 | 2,218 | ||||||||
| Transaction expenses, net(2) | 313 | 818 | 604 | ||||||||
| Strategic transition costs(3) | 531 | 889 | 211 | ||||||||
| Impairments and loss on disposal of assets(4) | 137 | 139 | 741 | ||||||||
| Delaware Voluntary Disclosure Agreement Program(5) | 1 | 25 | 794 | ||||||||
| Recruiting and relocation costs(6) | — | 254 | 50 | ||||||||
| Insurance proceeds in connection with natural disasters, net(8) | — | 329 | — | ||||||||
| Adjusted EBITDA | $ | 33,687 | $ | 24,297 | $ | 24,625 | |||||
| Total revenues | $ | 316,352 | $ | 263,291 | $ | 244,633 | |||||
| Net income margin | 4.8 | % | 0.3 | % | 1.1 | % | |||||
| Adjusted EBITDA margin | 10.6 | % | 9.2 | % | 10.1 | % | |||||
| Additional information | |||||||||||
| Deferred rent (income) expense(9) | $ | (28 | ) | $ | 242 | $ | 515 | ||||
| FISCAL YEAR | |||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||
| Net income | $ | 19,432 | $ | 18,925 | $ | 25,385 | |||||
| Depreciation and amortization | 75,011 | 57,715 | 41,223 | ||||||||
| Interest expense | 16,699 | 12,640 | 8,063 | ||||||||
| Income taxes | (7,299 | ) | 9,101 | 10,690 | |||||||
| EBITDA | 103,843 | 98,381 | 85,361 | ||||||||
| Stock-based compensation, net of amounts capitalized(1) | 10,760 | 8,525 | 7,604 | ||||||||
| Transaction expenses, net(2) | 2,533 | 2,587 | 3,147 | ||||||||
| Strategic transition costs(3) | 3,279 | 1,843 | 892 | ||||||||
| Impairments and loss on disposal of assets(4) | 448 | 525 | 1,359 | ||||||||
| Delaware Voluntary Disclosure Agreement Program(5) | 55 | 126 | 1,250 | ||||||||
| Recruiting and relocation costs(6) | — | 888 | 465 | ||||||||
| Severance costs(7) | — | 204 | 26 | ||||||||
| Insurance proceeds in connection with natural disasters, net(8) | — | 329 | (621 | ) | |||||||
| Loss on extinguishment of debt | — | 428 | — | ||||||||
| Adjusted EBITDA | $ | 120,918 | $ | 113,836 | $ | 99,483 | |||||
| Total revenues | $ | 1,222,501 | $ | 1,015,910 | $ | 891,551 | |||||
| Net income margin | 1.6 | % | 1.9 | % | 2.8 | % | |||||
| Adjusted EBITDA margin | 9.9 | % | 11.2 | % | 11.2 | % | |||||
| Additional information | |||||||||||
| Deferred rent expense(9) | $ | 309 | $ | 1,318 | $ | 2,090 | |||||
___________________________
(1) Represents non-cash, stock-based compensation expense, net of amounts capitalized, which is recorded within General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income.
(2) Represents costs incurred in connection with the acquisition of franchise-owned restaurants, secondary offering costs, costs related to restaurant closures, expenses related to debt, and revaluations of contingent consideration liability.
(3) Represents costs related to process improvements and strategic initiatives. These costs are recorded within General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income.
(4) Represents impairment charges and costs related to the disposal of assets due to retirements, replacements, restaurant closures and natural disasters.
(5) Represents estimated professional service costs incurred in connection with the Delaware Voluntary Disclosure Agreement Program related to unclaimed or abandoned property. These costs are recorded in General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income.
(6) Represents costs incurred for hiring qualified individuals. These costs are recorded within General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income.
(7) Severance costs are recorded in General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income.
(8) Represents insurance recoveries, net of costs incurred, in connection with hurricane damage, which were recorded in Other income, net on the Consolidated Statements of Operations and Comprehensive Income.
(9) Represents the non-cash portion of straight-line rent expense recorded within both Occupancy expenses and General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income.
Restaurant level operating profit and Restaurant level operating profit margin
Restaurant level operating profit and Restaurant level operating profit margin are not indicative of our overall results, and because they exclude corporate-level expenses, do not accrue directly to the benefit of our stockholders. We will continue to incur such expenses in the future. Restaurant level operating profit and Restaurant level operating profit margin are important measures we use to evaluate the performance and profitability of each operating restaurant, individually and in the aggregate and to make decisions regarding future spending and other operational decisions. We believe that Restaurant level operating profit and Restaurant level operating profit margin provide useful information about our operating results, identify operational trends and allow for transparency with respect to key metrics used by us in our financial and operational decision-making.
The following tables reconcile Income from operations and Income from operations margin, the most directly comparable GAAP financial measures, to Restaurant level operating profit and Restaurant level operating profit margin for the periods indicated:
| FOURTH QUARTER | |||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||
| Income from operations | $ | 9,035 | $ | 3,861 | $ | 6,855 | |||||
| Less: Franchise revenues | (2,389 | ) | (2,666 | ) | (3,591 | ) | |||||
| Add: | |||||||||||
| General and administrative expenses | 31,800 | 30,743 | 29,953 | ||||||||
| Depreciation and amortization | 20,656 | 15,755 | 12,231 | ||||||||
| Transaction expenses, net(1) | 313 | 818 | 604 | ||||||||
| Impairments and loss on disposal of assets(2) | 137 | 139 | 741 | ||||||||
| Costs in connection with natural disasters(3) | — | 312 | — | ||||||||
| Restaurant level operating profit | $ | 59,552 | $ | 48,962 | $ | 46,793 | |||||
| Restaurant sales | $ | 313,963 | $ | 260,625 | $ | 241,042 | |||||
| Income from operations margin | 2.9 | % | 1.5 | % | 2.8 | % | |||||
| Restaurant level operating profit margin | 19.0 | % | 18.8 | % | 19.4 | % | |||||
| Additional information | |||||||||||
| Deferred rent (income) expense(4) | $ | (44 | ) | $ | 192 | $ | 466 | ||||
| FISCAL YEAR | |||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||
| Income from operations | $ | 27,511 | $ | 38,907 | $ | 41,267 | |||||
| Less: Franchise revenues | (10,328 | ) | (11,555 | ) | (14,459 | ) | |||||
| Add: | |||||||||||
| General and administrative expenses | 128,950 | 113,270 | 103,121 | ||||||||
| Depreciation and amortization | 75,011 | 57,715 | 41,223 | ||||||||
| Transaction expenses, net(1) | 2,533 | 2,587 | 3,147 | ||||||||
| Impairments and loss on disposal of assets(2) | 448 | 525 | 1,359 | ||||||||
| Costs in connection with natural disasters(3) | — | 312 | — | ||||||||
| Restaurant level operating profit | $ | 224,125 | $ | 201,761 | $ | 175,658 | |||||
| Restaurant sales | $ | 1,212,173 | $ | 1,004,355 | $ | 877,092 | |||||
| Income from operations margin | 2.3 | % | 3.9 | % | 4.7 | % | |||||
| Restaurant level operating profit margin | 18.5 | % | 20.1 | % | 20.0 | % | |||||
| Additional information | |||||||||||
| Deferred rent expense(4) | $ | 167 | $ | 1,119 | $ | 1,891 | |||||
____________________________
(1) Represents costs incurred in connection with the acquisition of franchise-owned restaurants, secondary offering costs, costs related to restaurant closures, expenses related to debt and revaluations of contingent consideration liability.
(2) Represents impairment charges and costs related to the disposal of assets due to retirements, replacements, restaurant closures and natural disasters.
(3) Represents costs incurred in connection with hurricane damage. The costs include inventory spoilage and labor costs, which were recorded in Food and beverage costs and Labor and other related expenses, respectively. on the Consolidated Statements of Operations and Comprehensive Income.
(4) Represents the non-cash portion of straight-line rent expense recorded within Occupancy expenses on the Consolidated Statements of Operations and Comprehensive Income.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (Unaudited) | |||||||||||
| Fourth Quarter | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
| Revenues: | |||||||||||
| Restaurant sales | $ | 313,963 | $ | 260,625 | $ | 241,042 | |||||
| Franchise revenues | 2,389 | 2,666 | 3,591 | ||||||||
| Total revenues | 316,352 | 263,291 | 244,633 | ||||||||
| Operating costs and expenses: | |||||||||||
| Restaurant operating expenses (exclusive of depreciation and amortization shown below): | |||||||||||
| Food and beverage costs | 71,743 | 59,245 | 54,346 | ||||||||
| Labor and other related expenses | 105,093 | 87,706 | 81,698 | ||||||||
| Other restaurant operating expenses | 47,683 | 38,736 | 36,905 | ||||||||
| Occupancy expenses | 26,939 | 21,961 | 18,450 | ||||||||
| Pre-opening expenses | 2,953 | 4,327 | 2,850 | ||||||||
| General and administrative expenses | 31,800 | 30,743 | 29,953 | ||||||||
| Depreciation and amortization | 20,656 | 15,755 | 12,231 | ||||||||
| Impairments and loss on disposal of assets | 137 | 139 | 741 | ||||||||
| Transaction expenses, net | 313 | 818 | 604 | ||||||||
| Total operating costs and expenses | 307,317 | 259,430 | 237,778 | ||||||||
| Income from operations | 9,035 | 3,861 | 6,855 | ||||||||
| Interest expense | (4,795 | ) | (3,219 | ) | (2,271 | ) | |||||
| Other income, net | 180 | 96 | 921 | ||||||||
| Income before income taxes | 4,420 | 738 | 5,505 | ||||||||
| Income tax benefit (expense) | 10,744 | (39 | ) | (2,857 | ) | ||||||
| Net income | $ | 15,164 | $ | 699 | $ | 2,648 | |||||
| Net income | $ | 15,164 | $ | 699 | $ | 2,648 | |||||
| Other comprehensive income: | |||||||||||
| Unrealized gain (loss) on derivatives | 51 | 2,722 | (1,986 | ) | |||||||
| Income tax related to other comprehensive (loss) income | (14 | ) | (679 | ) | 494 | ||||||
| Other comprehensive income (loss) | 37 | 2,043 | (1,492 | ) | |||||||
| Comprehensive income | $ | 15,201 | $ | 2,742 | $ | 1,156 | |||||
| Net income per common share - basic | $ | 0.25 | $ | 0.01 | $ | 0.04 | |||||
| Net income per common share - diluted | $ | 0.24 | $ | 0.01 | $ | 0.04 | |||||
| Weighted average number of common shares outstanding - basic | 61,054,021 | 60,636,071 | 59,827,847 | ||||||||
| Weighted average number of common shares outstanding - diluted | 62,877,592 | 62,335,821 | 61,688,871 | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) | ||||||||||||
| FISCAL YEAR | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Revenues: | ||||||||||||
| Restaurant sales | $ | 1,212,173 | $ | 1,004,355 | $ | 877,092 | ||||||
| Franchise revenues | 10,328 | 11,555 | 14,459 | |||||||||
| Total revenues | 1,222,501 | 1,015,910 | 891,551 | |||||||||
| Operating costs and expenses: | ||||||||||||
| Restaurant operating expenses (exclusive of depreciation and amortization shown below): | ||||||||||||
| Food and beverage costs | 280,098 | 223,097 | 197,374 | |||||||||
| Labor and other related expenses | 405,544 | 335,038 | 294,010 | |||||||||
| Other restaurant operating expenses | 188,685 | 151,968 | 134,477 | |||||||||
| Occupancy expenses | 100,788 | 82,694 | 68,400 | |||||||||
| Pre-opening expenses | 12,933 | 10,109 | 7,173 | |||||||||
| General and administrative expenses | 128,950 | 113,270 | 103,121 | |||||||||
| Depreciation and amortization | 75,011 | 57,715 | 41,223 | |||||||||
| Impairments and loss on disposal of assets | 448 | 525 | 1,359 | |||||||||
| Transaction expenses, net | 2,533 | 2,587 | 3,147 | |||||||||
| Total operating costs and expenses | 1,194,990 | 977,003 | 850,284 | |||||||||
| Income from operations | 27,511 | 38,907 | 41,267 | |||||||||
| Interest expense | (16,699 | ) | (12,640 | ) | (8,063 | ) | ||||||
| Other income, net | 1,321 | 1,759 | 2,871 | |||||||||
| Income before income taxes | 12,133 | 28,026 | 36,075 | |||||||||
| Income tax benefit (expense) | 7,299 | (9,101 | ) | (10,690 | ) | |||||||
| Net income | $ | 19,432 | $ | 18,925 | $ | 25,385 | ||||||
| Net income | $ | 19,432 | $ | 18,925 | $ | 25,385 | ||||||
| Other comprehensive (loss) income: | ||||||||||||
| Unrealized (loss) gain on derivatives | (869 | ) | 301 | (889 | ) | |||||||
| Income tax related to other comprehensive (loss) income | 215 | (75 | ) | 222 | ||||||||
| Other comprehensive (loss) income | (654 | ) | 226 | (667 | ) | |||||||
| Comprehensive income | $ | 18,778 | $ | 19,151 | $ | 24,718 | ||||||
| Net income per common share - basic | $ | 0.32 | $ | 0.31 | $ | 0.43 | ||||||
| Net income per common share - diluted | $ | 0.31 | $ | 0.30 | $ | 0.41 | ||||||
| Weighted average number of common shares outstanding - basic | 60,963,587 | 60,365,393 | 59,531,404 | |||||||||
| Weighted average number of common shares outstanding - diluted | 62,842,519 | 62,351,222 | 61,191,613 | |||||||||
Same-Restaurant Sales Growth and Same-Restaurant Traffic Growth
| THIRTEEN WEEKS ENDED | SAME-RESTAURANT SALES GROWTH | SAME-RESTAURANT TRAFFIC GROWTH | COMPARABLE RESTAURANT BASE | |||||
| 3.1 | % | * | (1.9 | )% | * | 381 | ||
| (0.3 | )% | * | (3.0 | )% | * | 344 | ||
| 5.0 | % | ** | (1.3 | )% | ** | 327 | ||
___________________
*Comparison to the 13 weeks ended
**Thirteen weeks ended
