In This Article:
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Total Revenue: $282.2 million, an increase of 16.4%.
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Same-Restaurant Sales Growth: 0.7%.
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Same-Restaurant Traffic: Negative 0.7%.
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New System-Wide Restaurant Openings: 13 new restaurants, ending with 584 locations.
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Restaurant Level Operating Profit Margin: 16.5%.
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Adjusted EBITDA: $22.8 million, with a margin of 8.1%.
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Net Loss: $829,000.
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Food and Beverage Expense: 23.8% of sales, impacted by commodity inflation of 7.7%.
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Labor and Related Expenses: 34.6% of sales, with labor inflation at 4.1%.
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G&A Expenses: 10.7% of total revenue, a 70 basis point improvement.
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Capital Expenditures Guidance: $150 million to $160 million.
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Adjusted EBITDA Guidance: Lowered to $114 million to $119 million.
Release Date: May 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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First Watch Restaurant Group Inc (NASDAQ:FWRG) reported a 16% total revenue growth in the first quarter of 2025.
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The company opened 13 new system-wide restaurants, expanding its footprint across 10 states.
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First Watch's strategic marketing efforts have shown promising results, enhancing brand awareness and customer engagement.
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The company has successfully reduced employee turnover rates for the eighth consecutive quarter.
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First Watch's new restaurant openings are outperforming expectations, supporting their growth strategy and market expansion.
Negative Points
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Same-restaurant traffic was negative 0.7% for the quarter, with in-restaurant traffic below expectations.
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The company is facing higher inflationary pressures, particularly in key commodities like eggs, bacon, coffee, and avocados.
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Adjusted EBITDA was $5.8 million below last year, with a margin decrease to 8.1% from 11.8%.
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The company's margins are being pressured by increased health benefit costs and higher labor expenses.
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First Watch's decision to increase portion sizes without raising prices has added pressure on margins.
Q & A Highlights
Q: Can you elaborate on the positive sales and traffic trends in March and April, considering the Easter shift? A: Mel Hope, CFO, noted that while the Easter shift caused some favorability, the underlying trend remained positive across both periods. CEO Chris Tomasso added that they saw sequential positive dine-in traffic improvement for all four quarters last year, and this trend continued in Q1, excluding February.
Q: How do you balance driving traffic through third-party actions at a lower margin? A: Chris Tomasso, CEO, emphasized that the strategy is working, with encouraging results. The focus is on driving traffic in dining rooms and third-party channels, despite cost pressures. The company is confident that current cost challenges are not permanent and is prioritizing top-line growth.