8-K: First Watch Reports Q1 2026 Results, Reaffirms Outlook

First Watch Restaurant Group, Inc. announced its first fiscal quarter 2026 financial results, reporting a 17.3% increase in total revenues and reaffirming its full-year topline growth outlook while raising the low end of its Adjusted EBITDA guidance.

Summary

• Total revenues for the first fiscal quarter ended March 29, 2026, increased by 17.3% to $331.0 million, up from $282.2 million in the same period of 2025.
• System-wide sales grew by 13.8% to $367.6 million compared to $323.0 million in Q1 2025.
• Same-restaurant sales increased by 2.8%, though same-restaurant traffic saw a decrease of 2.0%.
• The company reported a net loss of $2.7 million ($0.04 per diluted share) for Q1 2026, an increase from a net loss of $0.8 million ($0.01 per diluted share) in Q1 2025.
• Adjusted EBITDA rose to $27.8 million from $22.8 million in the prior year's first quarter.
• Sixteen new system-wide restaurants were opened in 11 states during the quarter, contributing to a total of 648 system-wide restaurants.
• The company is reaffirming its full-year total revenue growth outlook of 12% to 14% and raising the low end of its Adjusted EBITDA guidance to $133 million - $140 million for fiscal year 2026.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a mixed-to-positive report. While revenue growth and Adjusted EBITDA are trending positively and guidance has been adjusted upwards, the increased net loss and declining traffic are concerns.

Positives

• Total revenues increased by 17.3% to $331.0 million.
• System-wide sales increased by 13.8% to $367.6 million.
• Same-restaurant sales grew by 2.8%.
• Restaurant-level operating profit margin increased to 18.5% from 16.5% in the prior year.
• Adjusted EBITDA increased to $27.8 million from $22.8 million.
• 16 new system-wide restaurants were opened, demonstrating continued unit growth.
• Full-year topline growth outlook is reaffirmed, and the low end of Adjusted EBITDA guidance was raised.

Negatives

• Net loss increased to $2.7 million from $0.8 million in the prior year's quarter.
• Same-restaurant traffic decreased by 2.0%.
• Income from operations margin decreased to 0.3% from 0.4%.

Risks

• Vulnerability to changes in consumer preferences and economic conditions such as inflation and recession.
• Inability to successfully open new restaurants or establish new markets.
• Potential negative impacts on sales from opening new restaurants in existing markets.
• Decline in visitors to retail, lifestyle, or entertainment centers where restaurants are located.
• Changes in the cost of food.
• Unprofitability or closure of new restaurants or lower than previously experienced performance in existing restaurants.
• Inability to compete effectively for customers.
• Vulnerability to food safety and food-borne illness concerns.

Future Outlook

For the 52-week fiscal year ending December 27, 2026, the company is reaffirming its total revenue growth outlook of 12% to 14% and raising the low end of its Adjusted EBITDA guidance to $133 million to $140 million. They also expect to open 59 to 63 net new system-wide restaurants and plan capital expenditures of $150 million to $160 million.

Management Comments

• "I am proud of our teams for delivering solid results, exemplified by Same Restaurant Sales growth of 2.8% and expanded restaurant-level operating profit versus a year ago."
• "Our track record of rapid unit growth continued this quarter with 16 new restaurants added, bringing to 67 the total number of new restaurants opened over the past twelve months."
• "With strong execution against our 2026 plan and encouraging early results, we are reaffirming our fullyear topline growth outlook and raising the low end of our adjusted EBITDA guidance."

Industry Context

StockSavvy.ai notes that First Watch's performance in Q1 2026, with revenue growth and continued unit expansion, aligns with broader trends in the casual dining sector favoring concepts with fresh ingredients and distinct dayparts. However, the decline in traffic and increased net loss warrant close monitoring.

Comparison to Industry Standards

• First Watch's same-restaurant sales growth of 2.8% in Q1 2026 compares to an industry average that has shown variability. For instance, during similar periods, competitors like Cracker Barrel have reported modest same-store sales growth, while others in the fast-casual breakfast segment might show higher growth but also face different cost structures.
• The company's Adjusted EBITDA margin of 8.4% is a key performance indicator. While specific industry benchmarks for Adjusted EBITDA margins in the 'Daytime Dining' niche are not widely published, it is generally understood that restaurant chains aim for margins in the high single digits to low double digits, depending on their operational model and scale. First Watch's margin is within this general range but lower than its own historical performance in prior years (9.9% in FY2025).
• The opening of 16 new restaurants in Q1 2026 reflects an aggressive expansion strategy. This pace of unit growth is generally considered strong within the restaurant industry, where many established players focus on slower, more deliberate expansion or even store closures.

Stakeholder Impact

• Shareholders: Potential for increased value due to revenue growth and raised EBITDA guidance, but tempered by increased net loss and traffic decline.
• Employees: Continued expansion may lead to new job opportunities, but increased operational focus is needed to manage traffic.
• Suppliers: Increased sales volume will likely lead to higher demand for food and beverage products.
• Franchisees: Growth in system-wide sales benefits franchisees, but traffic trends need to be managed across all locations.

Next Steps

• Continue execution against the 2026 plan.
• Focus on opening 59 to 63 net new system-wide restaurants for the full year.
• Invest $150 million to $160 million in capital expenditures for new restaurant projects and remodels.
• Monitor same-restaurant sales and traffic trends.

Key Dates

Recommendation

The company demonstrates strong revenue growth and unit expansion, coupled with an upward revision to EBITDA guidance, which are positive indicators. However, the increased net loss and declining customer traffic present headwinds that warrant a cautious 'hold' stance until traffic trends improve and profitability stabilizes.

Keywords

First Watch, Restaurant, Daytime Dining, Q1 2026, Financial Results, Same-Restaurant Sales, Adjusted EBITDA, Revenue Growth