First Watch Restaurant Group, Inc. Reports Q2 2024 Financial Results
First Watch Restaurant Group (NASDAQ: FWRG) reported strong Q2 2024 financial results, with total revenues increasing 19.5% to $258.6 million. The company saw improvements in key metrics, including:
- Income from operations margin up 110 basis points
- Restaurant level operating profit margin up 100 basis points
- Net income increased 12% to $8.9 million
- Adjusted EBITDA rose 37% to $35.3 million
Despite challenges, FWRG opened 7 new system-wide restaurants across 6 states and acquired 21 operating franchise restaurants. The company updated its fiscal year 2024 guidance, projecting same-restaurant sales growth between -2.0% to flat, and total revenue growth of 17.0% to 19.0%.
Il First Watch Restaurant Group (NASDAQ: FWRG) ha riportato risultati finanziari solidi per il secondo trimestre del 2024, con un aumento del 19,5% dei ricavi totali, pari a $258,6 milioni. L'azienda ha registrato miglioramenti nei principali indicatori, tra cui:
- Margine operativo in aumento di 110 punti base
- Margine di profitto operativo a livello di ristorante in aumento di 100 punti base
- Utile netto aumentato del 12% a $8,9 milioni
- EBITDA rettificato salito del 37% a $35,3 milioni
Nonostante le sfide, FWRG ha aperto 7 nuovi ristoranti in tutto il sistema in 6 stati e ha acquisito 21 ristoranti in franchising operativi. L'azienda ha aggiornato le previsioni per l'anno fiscale 2024, prevedendo una crescita delle vendite nei ristoranti esistenti tra -2,0% e stabile, e una crescita dei ricavi totali tra il 17,0% e il 19,0%.
El First Watch Restaurant Group (NASDAQ: FWRG) reportó sólidos resultados financieros para el segundo trimestre de 2024, con un aumento del 19.5% en los ingresos totales, alcanzando los $258.6 millones. La compañía vio mejoras en métricas clave, incluyendo:
- Margen de ingresos por operaciones incrementado en 110 puntos básicos
- Margen de beneficio operativo a nivel de restaurante incrementado en 100 puntos básicos
- Ingreso neto aumentado en un 12% a $8.9 millones
- EBITDA ajustado creció un 37% a $35.3 millones
A pesar de los desafíos, FWRG abrió 7 nuevos restaurantes en todo el sistema en 6 estados y adquirió 21 restaurantes en franquicia en operación. La compañía actualizó su guía financiera para el año fiscal 2024, proyectando un crecimiento de ventas en restaurantes comparables entre -2.0% y estable, y un crecimiento en los ingresos totales entre 17.0% y 19.0%.
퍼스트 워치 레스토랑 그룹(나스닥: FWRG)은 2024년 2분기 강력한 재무 결과를 보고했으며, 총 수익이 19.5% 증가하여 2억5860만 달러에 달했습니다. 회사는 다음과 같은 주요 지표에서 개선을 보였습니다:
- 운영 소득 마진이 110bp 상승
- 레스토랑 수준 운영 이익 마진이 100bp 상승
- 순이익은 12% 증가하여 890만 달러에 달함
- 조정된 EBITDA는 37% 증가하여 3530만 달러에 도달함
어려움에도 불구하고 FWRG는 6개 주에 걸쳐 시스템 전역에 7개의 신규 레스토랑을 열고 21개의 운영 중인 프랜차이즈 레스토랑을 인수했습니다. 이 회사는 2024 회계연도 가이드를 업데이트하며, 동일 레스토랑 매출 성장률을 -2.0%에서 안정적으로, 총 수익 성장률을 17.0%에서 19.0%로 예상했습니다.
Le First Watch Restaurant Group (NASDAQ: FWRG) a annoncé des résultats financiers solides pour le deuxième trimestre 2024, avec une augmentation de 19,5 % des revenus totaux, atteignant 258,6 millions de dollars. L'entreprise a observé des améliorations dans des indicateurs clés, notamment :
- Marge de gain provenant des opérations en hausse de 110 points de base
- Marge de bénéfice opérationnel au niveau des restaurants en hausse de 100 points de base
- Revenu net en hausse de 12 % à 8,9 millions de dollars
- EBITDA ajusté en hausse de 37 % à 35,3 millions de dollars
Malgré les défis, FWRG a ouvert 7 nouveaux restaurants dans l'ensemble du système dans 6 États et a acquis 21 restaurants franchisés en exploitation. L'entreprise a mis à jour ses prévisions pour l'exercice 2024, projetant une croissance des ventes dans les restaurants comparables entre -2,0 % et stable, et une croissance des revenus totaux entre 17,0 % et 19,0 %.
Die First Watch Restaurant Group (NASDAQ: FWRG) hat für das zweite Quartal 2024 starke Finanzergebnisse gemeldet, mit einem Anstieg der Gesamteinnahmen um 19,5% auf 258,6 Millionen Dollar. Das Unternehmen verzeichnete Verbesserungen bei den wichtigsten Kennzahlen, darunter:
- Betriebsergebnis-Marge um 110 Basispunkte gestiegen
- Betriebsergebnis-Marge auf Restaurantebene um 100 Basispunkte gestiegen
- Nettogewinn um 12% auf 8,9 Millionen Dollar gestiegen
- Bereinigtes EBITDA um 37% auf 35,3 Millionen Dollar gestiegen
Trotz Herausforderungen hat FWRG 7 neue Restaurants im gesamten System in 6 Bundesstaaten eröffnet und 21 betriebene Franchiserestaurants übernommen. Das Unternehmen hat seine Prognose für das Geschäftsjahr 2024 aktualisiert und erwartet ein Wachstum des Umsatzes in vergleichbaren Restaurants zwischen -2,0% und stabil sowie ein Wachstum der Gesamteinnahmen zwischen 17,0% und 19,0%.
- Total revenues increased 19.5% to $258.6 million in Q2 2024
- Income from operations margin improved 110 basis points to 6.4%
- Restaurant level operating profit margin increased 100 basis points to 21.9%
- Net income grew 12% to $8.9 million
- Adjusted EBITDA rose 37% to $35.3 million
- Opened 7 new system-wide restaurants and acquired 21 operating franchise restaurants
- Projected total revenue growth of 17.0% to 19.0% for fiscal year 2024
- Same-restaurant sales growth of -0.3% in Q2 2024
- Same-restaurant traffic growth of -4.0% in Q2 2024
- Updated guidance for fiscal year 2024 includes same-restaurant sales growth between -2.0% to flat
- Projected same-restaurant traffic growth in the negative mid-single digits for fiscal year 2024
Insights
First Watch's Q2 2024 results show strong revenue growth of
The negative same-restaurant sales (
The acquisition of 21 franchise restaurants and the opening of 7 new system-wide restaurants show continued expansion, but investors should monitor the performance of new locations closely given the negative same-restaurant metrics.
First Watch's performance in Q2 2024 reveals interesting market dynamics. The negative same-restaurant sales and traffic suggest a potential shift in consumer behavior or increased competition in the breakfast and brunch segment. However, the company's ability to grow revenue and profitability in this environment indicates effective pricing strategies and operational efficiencies.
The company's expansion plans, with over 130 new sites in the pipeline, show confidence in their growth potential. This aggressive expansion strategy could be risky given the current traffic trends, but may also help First Watch capture market share and build brand awareness in new areas.
The updated outlook for fiscal year 2024, projecting same-restaurant sales growth between
First Watch's Q2 2024 results demonstrate resilience in a challenging restaurant environment. The company's focus on daytime dining appears to be a strategic advantage, allowing for efficient operations and lower labor costs compared to full-service restaurants with longer hours.
The improvement in employee turnover and accelerated ticket times are particularly noteworthy, as these factors directly impact customer satisfaction and operational efficiency. This operational excellence is likely contributing to the improved profitability metrics despite negative traffic growth.
The acquisition of 21 franchise restaurants is a strategic move that could lead to better control over brand standards and potentially higher profitability. However, it also increases the company's direct exposure to operational risks and capital requirements.
First Watch's ability to maintain growth and improve margins in a difficult market demonstrates strong execution, but the negative traffic trends warrant close attention as they could impact long-term growth prospects if not reversed.
Total revenues increased
Income from operations margin improved 110 basis points and Restaurant level operating profit margin improved 100 basis points
Net income increased 12% to
7 new system-wide restaurants opened across 6 states
BRADENTON, Fla., Aug. 06, 2024 (GLOBE NEWSWIRE) -- First Watch Restaurant Group, Inc. (NASDAQ: FWRG) (“First Watch” or the “Company”), the leading Daytime Dining concept serving breakfast, brunch and lunch, today reported financial results for the thirteen weeks ended June 30, 2024 (“Q2 2024”).
“We are pleased with our second quarter results and proud of our teams for delivering exceptional experiences for our customers and employees. Amidst a challenging backdrop, which we view as transitory, we are operating our restaurants at a very high level and with tremendous efficiency, as exemplified by our adjusted EBITDA growth, high customer satisfaction scores, improved employee turnover and accelerated ticket times,” said Chris Tomasso, First Watch CEO and President. “Our future growth plans remain as strong as ever, with new restaurants overall and by vintage meeting or exceeding our AUV and capital return targets, and we have more than 130 new sites in the pipeline.”
Highlights for Q2 2024 compared to Q2 2023*:
- Total revenues increased
19.5% to$258.6 million in Q2 2024 from$216.3 million in Q2 2023 - System-wide sales increased
10.1% to$299.0 million in Q2 2024 from$271.5 million in Q2 2023 - Same-restaurant sales growth of negative
0.3% and same-restaurant traffic growth of negative4.0% * - Income from operations margin increased to
6.4% in Q2 2024 from5.3% in Q2 2023 - Restaurant level operating profit margin** increased to
21.9% in Q2 2024 from20.9% in Q2 2023 - Net income increased to
$8.9 million , or$0.14 per diluted share, in Q2 2024 from$8.0 million , or$0.13 per diluted share, in Q2 2023 - Adjusted EBITDA** increased to
$35.3 million in Q2 2024 from$25.8 million in Q2 2023 - Opened 7 system-wide restaurants in 6 states, resulting in a total of 538 system-wide restaurants (459 company-owned and 79 franchise-owned) across 29 states
- Acquired 21 operating franchise restaurants
___________________
* Comparing the thirteen-week periods ended June 30, 2024 and July 2, 2023 in order to compare like-for-like periods. See “Key Performance Indicators” for additional information.
** See Non-GAAP Financial Measures Reconciliations section below.
For additional financial information related to the thirteen weeks ended June 30, 2024, refer to the Company’s quarterly report on Form 10-Q filed with the Securities and Exchange Commission on August 6, 2024, which can be accessed at https://investors.firstwatch.com in the Financials & Filings section.
Updated Outlook Fiscal Year 2024
Based upon second quarter results and current trends, the Company updates the following guidance metrics for the 52-week fiscal year ending December 29, 2024:
- Same-restaurant sales growth in a range of negative
2.0% -to-flat with same restaurant traffic growth in the negative mid-single digits - Total of 52-56 new system-wide restaurants, net of 2 company-owned restaurant closures (45 to 48 new company-owned restaurants and 9 to 10 new franchise-owned restaurants)
- Blended tax rate of
31.0% to33.0%
The Company confirms the following guidance metrics for the 52-week fiscal year ending December 29, 2024:
- Total revenue growth in the range of
17.0% to19.0% (1) - Adjusted EBITDA(2) in the range of
$106.0 million to$112.0 million (1) - Capital expenditures in the range of
$125.0 million to$135.0 million invested primarily in new restaurant projects and planned remodels(3)
______________________
(1) Includes net impact of approximately
(2) 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, a reconciliation to the corresponding GAAP financial measure is not available without unreasonable effort.
(3) Does not include the capital outlays associated with the acquisition of franchise-owned restaurants.
Conference Call and Webcast
Chris Tomasso, Chief Executive Officer and President, and Mel Hope, Chief Financial Officer, will host a conference call and webcast to discuss these financial results for Q2 2024 on August 6, 2024 at 8:00 AM ET.
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 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”). For the thirteen weeks ended June 30, 2024 and July 2, 2023, there were 344 restaurants and 327 restaurants, respectively, in our Comparable Restaurant Base.
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. For the thirteen weeks ended June 30, 2024 and July 2, 2023, there were 344 restaurants and 327 restaurants, respectively, in our Comparable Restaurant Base.
Adjusted EBITDA: a non-GAAP measure, is defined as net income (loss) 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. In addition, Restaurant level operating profit excludes corporate-level expenses and items that are not considered in the Company’s evaluation of its 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 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 First Watch specialties such as the protein-packed 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 named 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, recognized with ADP's coveted Culture at Work Award. First Watch operates more than 535 First Watch restaurants in 29 states. 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 31, 2023, 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 and 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; 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 largest stockholder may differ from those of public stockholders.
The forward-looking statements included in this press release are made only as of the date hereof and are expressly qualified in their entirety by these cautionary statements. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. All information presented herein is based on our fiscal calendar. Unless otherwise stated, references to particular years, quarters, months or periods refer to our fiscal years and the associated quarters, months and periods of those fiscal years.
Investor Relations Contact
Steven L. Marotta
941-500-1918
investors@firstwatch.com
Media Relations Contact
Jenni Glester
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 the United States of America (“GAAP”), we use the following non-GAAP measures, which present operating results on an adjusted basis: (i) Adjusted EBITDA, (ii) Adjusted EBITDA margin, (iii) Restaurant level operating profit and (iv) Restaurant level operating profit margin. Our presentation of these non-GAAP measures includes isolating the effects of some items that are either nonrecurring in nature or vary from period to period without any correlation to our ongoing core operating performance. These supplemental measures of performance are not required by or presented in accordance with GAAP. Management believes these non-GAAP measures provide investors with additional visibility into our operations, facilitate analysis and comparisons of our ongoing business operations because they exclude items that may not be indicative of our ongoing operating performance, help to identify operational trends and allow for greater transparency with respect to key metrics used by management in our financial and operational decision making. Our non-GAAP measures may not be comparable to similarly titled measures used by other companies and have important limitations as analytical tools. These non-GAAP measures should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP as they may not provide a complete understanding of our performance. These non-GAAP measures should be reviewed in conjunction with our consolidated financial statements prepared in accordance with GAAP.
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 and (iii) internally as benchmarks to compare the Company’s performance to that of its competitors.
Non-GAAP Financial Measures Reconciliations
Adjusted EBITDA and Adjusted EBITDA margin - The following table reconciles Net income and Net income margin, the most directly comparable GAAP measures to Adjusted EBITDA and Adjusted EBITDA margin for the periods indicated:
| THIRTEEN WEEKS ENDED | TWENTY-SIX WEEKS ENDED | ||||||||||||||
| (in thousands) | JUNE 30, 2024 | JUNE 25, 2023 | JUNE 30, 2024 | JUNE 25, 2023 | |||||||||||
| Net income | $ | 8,900 | $ | 7,959 | $ | 16,114 | $ | 17,319 | |||||||
| Depreciation and amortization | 14,536 | 9,441 | 26,807 | 18,558 | |||||||||||
| Interest expense | 3,381 | 2,037 | 5,980 | 3,944 | |||||||||||
| Income taxes | 4,879 | 2,032 | 7,678 | 6,590 | |||||||||||
| EBITDA | 31,696 | 21,469 | 56,579 | 46,411 | |||||||||||
| Strategic costs (1) | 161 | 208 | 396 | 513 | |||||||||||
| Loss on extinguishment and modification of debt | — | — | 428 | — | |||||||||||
| Stock-based compensation (2) | 2,452 | 2,125 | 4,318 | 3,622 | |||||||||||
| Delaware Voluntary Disclosure Agreement Program (3) | 67 | 45 | 75 | 412 | |||||||||||
| Transaction expenses, net (4) | 725 | 1,744 | 1,394 | 1,997 | |||||||||||
| Insurance proceeds in connection with natural disasters, net (5) | — | (154 | ) | — | (295 | ) | |||||||||
| Impairments and loss on disposal of assets (6) | 153 | 299 | 272 | 433 | |||||||||||
| Recruiting and relocation costs (7) | 71 | 80 | 275 | 110 | |||||||||||
| Severance costs (8) | — | — | 178 | 26 | |||||||||||
| Adjusted EBITDA | $ | 35,325 | $ | 25,816 | $ | 63,915 | $ | 53,229 | |||||||
| Total revenues | $ | 258,561 | $ | 216,300 | $ | 501,010 | $ | 427,706 | |||||||
| Net income margin | 3.4 | % | 3.7 | % | 3.2 | % | 4.0 | % | |||||||
| Adjusted EBITDA margin | 13.7 | % | 11.9 | % | 12.8 | % | 12.4 | % | |||||||
| Additional information | |||||||||||||||
| Deferred rent expense (9) | $ | 406 | $ | 330 | $ | 749 | $ | 914 | |||||||
___________________________
(1) 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.
(2) Represents non-cash, stock-based compensation expense which is recorded within General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income.
(3) Represents 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.
(4) Represents costs incurred in connection with the acquisition of franchise-owned restaurants, expenses related to debt, secondary offering costs and, in 2024, an offsetting gain on release of contingent consideration liability.
(5) 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.
(6) Represents costs related to the disposal of assets due to retirements, replacements or certain restaurant closures. There were no impairments recognized during the periods presented.
(7) 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.
(8) Severance costs are recorded in General and administrative expenses 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:
| THIRTEEN WEEKS ENDED | TWENTY-SIX WEEKS ENDED | ||||||||||||||
| (in thousands) | JUNE 30, 2024 | JUNE 25, 2023 | JUNE 30, 2024 | JUNE 25, 2023 | |||||||||||
| Income from operations | $ | 16,447 | $ | 11,343 | $ | 28,733 | $ | 26,674 | |||||||
| Less: Franchise revenues | (3,104 | ) | (3,713 | ) | (6,245 | ) | (7,151 | ) | |||||||
| Add: | |||||||||||||||
| General and administrative expenses | 27,189 | 25,284 | 54,847 | 47,989 | |||||||||||
| Depreciation and amortization | 14,536 | 9,441 | 26,807 | 18,558 | |||||||||||
| Transaction expenses, net (1) | 725 | 1,744 | 1,394 | 1,997 | |||||||||||
| Impairments and loss on disposal of assets (2) | 153 | 299 | 272 | 433 | |||||||||||
| Restaurant level operating profit | $ | 55,946 | $ | 44,398 | $ | 105,808 | $ | 88,500 | |||||||
| Restaurant sales | $ | 255,457 | $ | 212,587 | $ | 494,765 | $ | 420,555 | |||||||
| Income from operations margin | 6.4 | % | 5.3 | % | 5.8 | % | 6.3 | % | |||||||
| Restaurant level operating profit margin | 21.9 | % | 20.9 | % | 21.4 | % | 21.0 | % | |||||||
| Additional information | |||||||||||||||
| Deferred rent expense (3) | $ | 357 | $ | 280 | $ | 650 | $ | 814 | |||||||
____________________________
(1) Represents costs incurred in connection with the acquisition of franchise-owned restaurants, expenses related to debt, secondary offering costs and, in 2024, an offsetting gain on release of contingent consideration liability.
(2) Represents costs related to the disposal of assets due to retirements, replacements or certain restaurant closures. There were no impairments recognized during the periods presented.
(3) Represents the non-cash portion of straight-line rent expense recorded within Occupancy expenses on the Consolidated Statements of Operations and Comprehensive Income.
| FIRST WATCH RESTAURANT GROUP, INC. | |||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | |||||||||||||||
| (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) | |||||||||||||||
| (Unaudited) | |||||||||||||||
| THIRTEEN WEEKS ENDED | TWENTY-SIX WEEKS ENDED | ||||||||||||||
| JUNE 30, 2024 | JUNE 25, 2023 | JUNE 30, 2024 | JUNE 25, 2023 | ||||||||||||
| Revenues: | |||||||||||||||
| Restaurant sales | $ | 255,457 | $ | 212,587 | $ | 494,765 | $ | 420,555 | |||||||
| Franchise revenues | 3,104 | 3,713 | 6,245 | 7,151 | |||||||||||
| Total revenues | 258,561 | 216,300 | 501,010 | 427,706 | |||||||||||
| Operating costs and expenses: | |||||||||||||||
| Restaurant operating expenses (exclusive of depreciation and amortization shown below): | |||||||||||||||
| Food and beverage costs | 55,803 | 47,692 | 107,987 | 94,319 | |||||||||||
| Labor and other related expenses | 83,841 | 70,602 | 163,576 | 139,175 | |||||||||||
| Other restaurant operating expenses | 37,549 | 32,182 | 74,341 | 63,878 | |||||||||||
| Occupancy expenses | 20,490 | 16,461 | 39,658 | 32,395 | |||||||||||
| Pre-opening expenses | 1,828 | 1,252 | 3,395 | 2,288 | |||||||||||
| General and administrative expenses | 27,189 | 25,284 | 54,847 | 47,989 | |||||||||||
| Depreciation and amortization | 14,536 | 9,441 | 26,807 | 18,558 | |||||||||||
| Impairments and loss on disposal of assets | 153 | 299 | 272 | 433 | |||||||||||
| Transaction expenses, net | 725 | 1,744 | 1,394 | 1,997 | |||||||||||
| Total operating costs and expenses | 242,114 | 204,957 | 472,277 | 401,032 | |||||||||||
| Income from operations | 16,447 | 11,343 | 28,733 | 26,674 | |||||||||||
| Interest expense | (3,381 | ) | (2,037 | ) | (5,980 | ) | (3,944 | ) | |||||||
| Other income, net | 713 | 685 | 1,039 | 1,179 | |||||||||||
| Income before income taxes | 13,779 | 9,991 | 23,792 | 23,909 | |||||||||||
| Income tax expense | (4,879 | ) | (2,032 | ) | (7,678 | ) | (6,590 | ) | |||||||
| Net income | $ | 8,900 | $ | 7,959 | $ | 16,114 | $ | 17,319 | |||||||
| Net income | $ | 8,900 | $ | 7,959 | $ | 16,114 | $ | 17,319 | |||||||
| Other comprehensive loss: | |||||||||||||||
| Unrealized (loss) gain on derivatives | (99 | ) | (160 | ) | 1,139 | (160 | ) | ||||||||
| Income tax related to other comprehensive income | 25 | — | (284 | ) | — | ||||||||||
| Comprehensive income | $ | 8,826 | $ | 7,799 | $ | 16,969 | $ | 17,159 | |||||||
| Net income per common share - basic | $ | 0.15 | $ | 0.13 | $ | 0.27 | $ | 0.29 | |||||||
| Net income per common share - diluted | $ | 0.14 | $ | 0.13 | $ | 0.26 | $ | 0.28 | |||||||
| Weighted average number of common shares outstanding - basic | 60,384,696 | 59,385,510 | 60,198,743 | 59,314,470 | |||||||||||
| Weighted average number of common shares outstanding - diluted | 62,464,424 | 60,944,836 | 62,507,183 | 60,770,441 | |||||||||||
FAQ
What was First Watch's (FWRG) total revenue growth in Q2 2024?
How many new restaurants did First Watch (FWRG) open in Q2 2024?
What was First Watch's (FWRG) Adjusted EBITDA for Q2 2024?
What is First Watch's (FWRG) updated same-restaurant sales growth guidance for fiscal year 2024?
