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First Watch Restaurant Group (FWRG)
NASDAQ:FWRG
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First Watch Restaurant Group
(NASDAQ:FWRG)
61Neutral
Positive Factors
Marketing and Customer Engagement
Enhanced marketing tactics will be scaled more aggressively in FY25, focusing on existing customers and attracting new ones, which is expected to drive flat to positive traffic.
Sales Momentum and Innovation
First Watch Restaurant Group is expected to see positive sales momentum, driven by menu innovation and leveraging technology to improve service efficiency and customer satisfaction.
Traffic Trends
Off-premises traffic trends have turned positive in 1Q25 after negative results in 2H24, expected to be a positive traffic driver for FY25.
Negative Factors
Commodity Inflation
Commodity inflation, particularly with eggs, bacon, coffee, and avocados, is expected to remain high, affecting the company's cost structure.
Cost of Goods Sold
FWRG is currently only carrying 2.8% of menu price, which will lead to some margin pressure on the COGS line.
Inflation and Cost Pressures
Management anticipates 8%-9% inflation for FY25 due to pressures in their commodity basket, which could lead to some margin pressure on the cost of goods sold.
First Watch Restaurant Group (FWRG) vs. S&P 500 (SPY)
Market Cap
$1.04B
Dividend YieldN/A
Average Volume (3M)758.99K
Price to Earnings (P/E)53.8
Beta (1Y)0.82
Revenue Growth13.95%
EPS Growth-26.46%
CountryUS
Employees15,000
SectorConsumer Cyclical
Sector Strength46
IndustryRestaurants
Share Statistics
EPS (TTM)0.30
Shares Outstanding60,700,090
10 Day Avg. Volume701,175
30 Day Avg. Volume758,993
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.98
Price to Cash Flow (P/CF)10.80
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$23.67Price Target Upside44.95% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
First Watch Restaurant Group Business Overview & Revenue Model
Company DescriptionFirst Watch Restaurant Group (FWRG) is a leading daytime dining concept that operates in the restaurant industry. Established in 1983, First Watch specializes in made-to-order breakfast, brunch, and lunch offerings across its network of company-owned and franchised locations. The company is known for its fresh and innovative menu options, focusing on quality ingredients and a welcoming dining experience.
How the Company Makes MoneyFirst Watch Restaurant Group generates revenue primarily through the sale of food and beverages at its restaurants. The company's revenue model involves both company-owned and franchised locations, allowing for a combination of direct sales and franchise fees. Key revenue streams include in-restaurant dining, takeout, and delivery services. Franchise operations contribute to earnings through initial franchise fees, ongoing royalties based on a percentage of sales, and contributions to marketing funds. The company also benefits from strategic partnerships with suppliers to optimize costs and enhance menu offerings. Additionally, First Watch capitalizes on its brand reputation and customer loyalty to drive repeat business and attract new customers.
First Watch Restaurant Group Financial Statement Overview
Summary
First Watch Restaurant Group shows strong revenue growth and improving profitability with significant gross profit margins. However, there are operational efficiency improvements needed and cash flow challenges due to high capital expenditures.Income Statement
First Watch Restaurant Group shows strong revenue growth with a growth rate of 14.0% from 2023 to 2024. The gross profit margin improved significantly over time, reaching 78.0% in 2024. The net profit margin increased to 1.9%. However, EBIT and EBITDA margins are relatively low at 3.8% and 5.4% respectively, indicating room for operational efficiency improvements.80
Positive
Balance Sheet
The company's balance sheet demonstrates moderate stability with a debt-to-equity ratio of 1.04, indicating a balanced use of debt and equity financing. Return on Equity (ROE) is modest at 3.2%, reflecting moderate profitability compared to equity. The equity ratio of 39.3% shows a solid equity base relative to total assets, although there is still significant leverage.70
Positive
Cash Flow
First Watch Restaurant Group exhibits a strong operating cash flow to net income ratio of 6.11, signifying efficient cash generation from operations. However, the free cash flow is negative, indicating high capital expenditures impacting liquidity. The free cash flow to net income ratio is -0.65, suggesting potential cash flow challenges despite operational strengths.65
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.02B | 891.55M | 730.16M | 601.19M | 342.39M | Gross Profit |
| 792.81M | 190.12M | 139.53M | 127.55M | 29.88M | EBIT |
| 38.91M | 41.27M | 16.91M | 22.24M | -47.16M | EBITDA |
| 98.38M | 85.36M | 54.73M | 59.71M | -4.29M | Net Income Common Stockholders |
| 18.93M | 25.39M | 6.91M | -2.11M | -49.68M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 33.31M | 49.63M | 49.67M | 51.86M | 38.85M | Total Assets |
| 1.51B | 1.27B | 1.10B | 1.05B | 1.01B | Total Debt |
| 620.51M | 606.97M | 507.35M | 473.97M | 637.90M | Net Debt |
| 587.20M | 557.33M | 457.68M | 422.11M | 599.06M | Total Liabilities |
| 918.97M | 705.76M | 581.31M | 542.49M | 686.65M | Stockholders Equity |
| 595.39M | 561.28M | 523.13M | 504.43M | 320.87M |
| Cash Flow | Free Cash Flow | |||
| -12.28M | 10.65M | -393.00K | 27.29M | -45.34M | Operating Cash Flow |
| 115.67M | 95.34M | 62.94M | 62.97M | -18.36M | Investing Cash Flow |
| -206.65M | -123.37M | -63.11M | -35.68M | -26.97M | Financing Cash Flow |
| 74.33M | 28.07M | -2.02M | -14.27M | 73.31M |
First Watch Restaurant Group Technical Analysis
Negative
16.33
Price Trends
19.18
Negative
19.08
Negative
17.59
Negative
Market Momentum
-0.60
Negative
49.92
Neutral
52.29
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FWRG, the sentiment is Negative. The current price of 16.33 is below the 20-day moving average (MA) of 17.02, below the 50-day MA of 19.18, and below the 200-day MA of 17.59, indicating a bearish trend. The MACD of -0.60 indicates Negative momentum. The RSI at 49.92 is Neutral, neither overbought nor oversold. The STOCH value of 52.29 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FWRG.
First Watch Restaurant Group Risk Analysis
First Watch Restaurant Group disclosed 56 risk factors in its most recent earnings report. First Watch Restaurant Group reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
First Watch Restaurant Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $2.36B | 14.27 | 41.18% | 2.36% | 4.13% | 56.76% | |
71 Outperform | $6.16B | 23.46 | 2390.91% | ― | 13.67% | 69.41% | |
67 Neutral | $741.52M | 46.27 | 4.54% | ― | 1.81% | -15.53% | |
61 Neutral | $1.04B | 53.84 | 3.27% | ― | 13.95% | -26.46% | |
59 Neutral | $12.18B | 11.09 | -1.08% | 3.77% | 1.26% | -19.82% | |
56 Neutral | $331.62M | 5.15 | -42.81% | 9.38% | -2.26% | -32.36% | |
41 Neutral | $58.52M | ― | 92.02% | ― | -4.19% | -266.52% |
* Consumer Cyclical Sector Average
Performance Comparison
FWRG
First Watch Restaurant Group
16.33
-6.85
-29.55%
BJRI
BJ's Restaurants
31.55
-3.55
-10.11%
EAT
Brinker International
135.07
86.87
180.23%
DIN
Dine Brands Global
21.09
-20.36
-49.12%
RRGB
Red Robin Gourmet
3.27
-3.57
-52.19%
CAKE
Cheesecake Factory
45.68
12.05
35.83%
First Watch Restaurant Group Earnings Call Summary
Earnings Call Date: Mar 11, 2025 | % Change Since: -9.78% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mix of strong performance metrics and strategic growth plans, alongside challenges with same restaurant sales and inflationary pressures. The company's expansion and operational improvements are notable positives, but they are balanced by the pressures from commodity inflation and traffic declines.Highlights
Record Revenue and Adjusted EBITDA
First Watch achieved over $1 billion in total revenue and over $100 million in adjusted EBITDA for the first time in the company's history.
Expansion and New Restaurant Openings
In 2024, 50 new restaurants were opened, including a record 25 in the fourth quarter. New restaurants are on pace to generate third-year sales of $2.6 million, 20% above the current system average.
Improved Operational Metrics
The company increased labor efficiency, improved restaurant-level operating profit margins, reduced ticket times, and improved employee turnover.
Positive Developments in Third-Party Delivery
Modifications in the approach to third-party delivery resulted in positive traffic year-to-date in 2025.
Strong New Restaurant Performance
Restaurants opened in 2024 are generating higher sales and returns than average, with a projected cash on cash return above 35% and IRR above 22%.
Lowlights
Negative Same Restaurant Sales
Same restaurant sales declined by 0.3%, and same restaurant traffic declined by 3% in the fourth quarter.
Commodity Inflation Pressures
High single-digit commodity inflation is expected for 2025, driven by increases in eggs, pork, coffee, and avocados, compounded by tariffs.
First Quarter 2025 EBITDA Decline
Adjusted EBITDA in the first quarter of 2025 is expected to be around $4 million below the first quarter of 2024 due to new restaurant openings and commodity price spikes.
February Traffic Challenges
February 2025 experienced negative low single-digit same restaurant traffic, attributed to unseasonably cold weather and a weaker industry backdrop.
Company Guidance
During the Fourth Quarter Earnings Conference Call for First Watch Restaurant Group, key financial metrics were highlighted, showcasing a strong performance in fiscal 2024 and an optimistic outlook for 2025. The company reported total revenue exceeding $1 billion, with an adjusted EBITDA surpassing $100 million for the first time in its history. The call also revealed a 16.8% increase in fourth-quarter revenues, adjusted EBITDA of $24.3 million, and a restaurant-level operating profit margin of 18.8%. Despite a slight decline in same-restaurant sales by 0.3%, the company opened 50 new restaurants, contributing to future growth. For fiscal 2025, First Watch anticipates total revenue growth of around 20%, driven by continued unit expansion and strategic marketing investments, with a focus on maintaining low single-digit positive same-restaurant sales growth. The company plans to open 59 to 64 new system-wide restaurants and expects a blended tax rate between 31% to 33%. The guidance also includes high single-digit commodity inflation, highlighting challenges from elevated prices for eggs, avocados, bacon, and coffee beans.First Watch Restaurant Group Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
First Watch Adopts Executive Severance Plan
Neutral
Mar 14, 2025
On March 5, 2025, First Watch Restaurant Group, Inc. announced the adoption of an Executive Severance Plan. This plan outlines severance benefits for executive officers in cases of termination without cause or resignation for good reason, including lump sum payments based on salary and target bonuses, as well as healthcare coverage. It also includes provisions for changes in control, offering enhanced benefits if such events occur within two years of a change.
Business Operations and StrategyFinancial Disclosures
First Watch Surpasses $1 Billion in Revenue Milestone
Positive
Mar 11, 2025
First Watch Restaurant Group reported a significant milestone in 2024, surpassing $1 billion in total revenues and achieving over $100 million in adjusted EBITDA for the first time. Despite a decrease in income from operations and net income compared to the previous year, the company opened 50 new restaurants across 19 states, bringing the total to 572 system-wide locations. Looking forward, First Watch anticipates continued growth in 2025, with plans to open up to 64 new restaurants and achieve a 20% increase in total revenue.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.