First Watch Restaurant Group, Inc. (NASDAQ: FWRG) (“First Watch” or
the “Company”), the Daytime Dining concept serving breakfast,
brunch and lunch, today reported certain preliminary operational
results for the fourteen weeks ended December 31, 2023 (“fourth
quarter”) and fiscal year ended December 31, 2023 (“2023”).
Management Commentary
“First Watch is the clear category leader in the
fast-growing Daytime Dining segment, and we delivered on our same
restaurant sales and traffic expectations for 2023. Our dining room
traffic growth improved sequentially in Q4, which is a reflection
of the exceptional experiences that our teams create for our
customers each day. Furthermore, the restaurants enjoyed better
food and labor cost than we previously projected,” said Chris
Tomasso, First Watch CEO and President. “Our expanding system grew
11% in 2023 versus 2022 as we opened a total of 51 system-wide
restaurants across 19 states. We also view franchise acquisitions
as an important part of our growth strategy, and since May 2023
have acquired, or announced agreement to acquire, 44
franchise-owned restaurants.”
Sales and Traffic Highlights
|
Fourth Quarter |
|
2023 |
|
Same-Restaurant Sales Growth (*) |
+5.0 |
% |
|
+7.6 |
% |
Same-Restaurant Sales Growth
compared to 2019 (**) |
+35.2 |
% |
|
+38.9 |
% |
Same-Restaurant Traffic Growth
(*) |
-1.3 |
% |
|
+0.2 |
% |
Same-Restaurant Traffic Growth
compared to 2019 (**) |
+6.2 |
% |
|
+7.5 |
% |
___________________
* Comparison to the fourteen weeks ended January
1, 2023, and 53 weeks ended January 1, 2023, is provided for
enhanced comparability.** Comparison to the fourteen weeks ended
January 5, 2020, and 53 weeks ended January 5, 2020, is provided
for enhanced comparability.
Restaurant Development
During 2023, there were 51 system-wide new
restaurant openings consisting of 37 company-owned restaurants and
14 franchise-owned restaurants with one company-owned restaurant
closure.
During the fourth quarter 2023, there were 19
new system-wide restaurant openings consisting of 17 company-owned
restaurants and 2 franchise-owned restaurants. One company-owned
restaurant that was expected to open in December 2023 was slightly
delayed and is now expected to open this week.
At December 31, 2023, First Watch had 524
system-wide restaurants, consisting of 425 company-owned
restaurants and 99 franchise-owned restaurants across 29
states.
Upcoming Conference
Participation
Chris Tomasso, Chief Executive Officer and
President, and Mel Hope, Chief Financial Officer, will host a
fireside chat today at the 26th Annual ICR Conference at the Grande
Lakes Orlando. The fireside chat webcast will begin at 10:30 a.m.
Eastern Time and will be available at
https://investors.firstwatch.com/news-and-events/events. It will
also be archived on the site shortly after it has concluded.
Chris Tomasso, Chief Executive Officer and
President, and Mel Hope, Chief Financial Officer, will also host
meetings with institutional investors at the Jefferies 13th Annual
Winter Consumer Summit at The Ritz-Carlton, Bachelor Gulch in Avon,
Colorado on January 22-23, 2024. Interested parties should contact
their Jefferies salesperson to request a meeting.
Definitions
The following definitions apply to these terms
as used in this release:
Same-restaurant sales growth:
the percentage change in year-over-year restaurant sales (excluding
gift card breakage) for the comparable restaurant base, which is
defined 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”). At December 31, 2023,
there were 327 restaurants in the one-year Comparable Restaurant
Base and 205 restaurants in the four-year Comparable Restaurant
Base. We gather daily sales data and regularly analyze the customer
traffic counts and the mix of menu items sold to aid in developing
menu pricing, product offerings and promotional strategies designed
to produce sustainable same-restaurant sales growth.
Same-restaurant traffic growth:
the percentage change in traffic counts as compared to the same
period in the prior year using the Comparable Restaurant Base. At
December 31, 2023, there were 327 restaurants in the one-year
Comparable Restaurant Base and 205 restaurants in the four-year
Comparable Restaurant Base. We gather daily traffic data and
regularly analyze customer traffic to aid in developing menu
pricing, product offerings and promotional strategies.
System-wide
restaurants: the total number of
restaurants, including all company-owned and franchise- owned
restaurants.
About First Watch
First Watch is an award-winning Daytime Dining
concept serving made-to-order breakfast, brunch and lunch using
fresh ingredients. A recipient of hundreds of local "Best
Breakfast" and "Best Brunch" accolades, First Watch's chef-driven
menu includes elevated executions of classic favorites along with
specialties such as the Quinoa Power Bowl®, Farm Stand Breakfast
Tacos, Avocado Toast, Chickichanga, Morning Meditation (juiced
in-house daily), Spiked Lavender Lemonade and its signature Million
Dollar Bacon. In 2023, First Watch was recognized as the top
restaurant brand in Yelp’s inaugural list of the top 50 most-loved
brands in the U.S. In 2023 and 2022, First Watch was named a Top
100 Most Loved Workplace® in Newsweek by the Best Practice
Institute. In 2022, First Watch was awarded a sought-after
MenuMasters honor by Nation's Restaurant News for its seasonal
Braised Short Rib Omelet and recognized with ADP's coveted Culture
at Work Award. There are more than 520 First Watch restaurants in
29 states, and the restaurant concept is majority owned by Advent
International, one of the world’s largest private-equity firms. For
more information,
visit www.firstwatch.com.
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 as of and for the year ended December 25, 2022, including
under Part I. Item 1A. “Risk Factors” and Part II. Item 7.
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” and our other filings with the Securities
and Exchange Commission (the “SEC”), accessible on the SEC’s
website at www.sec.gov and the Investors Relations section of the
Company’s website at
https://investors.firstwatch.com/financial-information/sec-filings.
Important factors that could cause actual results to differ
materially from those in the forward-looking statements include the
following: uncertainty regarding the Russia-Ukraine war,
Israel-Hamas war and the related impact on macroeconomic
conditions, including inflation, as a result of such conflicts or
other related events; our vulnerability to changes in economic
conditions and consumer preferences; our inability to successfully
open new restaurants or establish new markets; our inability to
effectively manage our growth; adverse effects of the COVID-19
pandemic or other infectious diseases; potential negative impacts
on sales at our and our franchisees’ restaurants as a result of our
opening new restaurants; a decline in visitors to any of the retail
centers, lifestyle centers, or entertainment centers where our
restaurants are located; lower than expected same-restaurant sales
growth; unsuccessful marketing programs and limited time new
offerings; changes in the cost of food; unprofitability or closure
of new restaurants or lower than previously experienced performance
in existing restaurants; our inability to compete effectively for
customers; unsuccessful financial performance of our franchisees;
our limited control over our franchisees’ operations; our inability
to maintain good relationships with our franchisees; conflicts of
interest with our franchisees; the geographic concentration of our
system-wide restaurant base in the southeast portion of the United
States; damage to our reputation and negative publicity; our
inability or failure to recognize, respond to and effectively
manage the accelerated impact of social media; our limited number
of suppliers and distributors for several of our frequently used
ingredients and shortages or disruptions in the supply or delivery
of such ingredients; information technology system failures or
breaches of our network security; our failure to comply with
federal and state laws and regulations relating to privacy, data
protection, advertising and consumer protection, or the expansion
of current or the enactment of new laws or regulations relating to
privacy, data protection, advertising and consumer protection; our
potential liability with our gift cards under the property laws of
some states; our failure to enforce and maintain our trademarks and
protect our other intellectual property; litigation with respect to
intellectual property assets; our dependence on our executive
officers and certain other key employees; our inability to
identify, hire, train and retain qualified individuals for our
workforce; our failure to obtain or to properly verify the
employment eligibility of our employees; our failure to maintain
our corporate culture as we grow; unionization activities among our
employees; employment and labor law proceedings; labor shortages or
increased labor costs or health care costs; risks associated with
leasing property subject to long-term and non-cancelable leases;
risks related to our sale of alcoholic beverages; costly and
complex compliance with federal, state and local laws; changes in
accounting principles applicable to us; our vulnerability to
natural disasters, unusual weather conditions, pandemic outbreaks,
political events, war and terrorism; our inability to secure
additional capital to support business growth; our level of
indebtedness; failure to comply with covenants under our credit
facility; and the interests of our majority stockholder may differ
from those of public stockholders. For additional discussion of
factors that could impact our operational and financial results,
please refer to our filings with the Securities and Exchange
Commission (the “SEC”), accessible on the SEC’s website at
www.sec.gov and the Investors Relations section of
the Company’s website at
https://investors.firstwatch.com/financial-information/sec-filings.
Should one or more of these risks or uncertainties materialize, or
should any of our assumptions prove incorrect, our actual financial
condition, results of operations, future performance and business
may vary in material respects from the performance projected in
these forward-looking statements.
Investor Relations
Contact:Steven L.
Marotta941-500-1918investors@firstwatch.com
Media Relations
Contact:FirstWatch@icrinc.com
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