8-K/A: First Watch Reports Strong 2025 Growth, Positive 2026 Outlook

First Watch Restaurant Group, Inc. reported a 20.3% increase in total revenues to $1.2 billion for 2025 and provided a positive outlook for 2026, including new restaurant growth and revenue expansion.

Summary

• Total revenues for fiscal year 2025 increased 20.3% to $1.2 billion, up from $1.0 billion in 2024.
• System-wide sales for 2025 increased to $1.4 billion from $1.2 billion in 2024.
• Same-restaurant sales growth for 2025 was 3.6%, accompanied by positive same-restaurant traffic growth of 0.5%.
• Net income for 2025 increased to $19.4 million, compared to $18.9 million in 2024.
• Adjusted EBITDA for 2025 increased to $120.9 million, up from $113.8 million in 2024.
• The company opened 64 system-wide restaurants in 2025 (55 company-owned and 9 franchise-owned), bringing the total to 633 system-wide restaurants across 32 states.
• For Q4 2025, total revenues increased 20.2% to $316.4 million from $263.3 million in Q4 2024.
• Q4 2025 net income was $15.2 million, a significant increase from $0.7 million in Q4 2024.
• Q4 2025 same-restaurant sales growth was 3.1%, though same-restaurant traffic growth was negative 1.9%.
• The outlook for fiscal year 2026 includes same-restaurant sales growth of 1% to 3%, total revenue growth of 12%-14%, and Adjusted EBITDA in the range of $132 million to $140 million.
• For 2026, the company plans to open 59 to 63 new system-wide restaurants, including 3 company-owned restaurant closures.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong performance with robust revenue and unit growth, indicating effective execution of its expansion strategy. While some margin compression was noted for the full year, the Q4 improvements and positive 2026 outlook suggest continued momentum.

Positives

• Strong revenue growth: 20.3% for 2025 ($1.2 billion) and 20.2% for Q4 2025 ($316.4 million).
• Significant system-wide sales increase: 16.1% for Q4 2025 ($353.1 million) and to $1.4 billion for 2025.
• Positive same-restaurant sales growth: 3.6% for 2025 and 3.1% for Q4 2025.
• Increased net income: $19.4 million for 2025 (up from $18.9 million) and $15.2 million for Q4 2025 (up from $0.7 million).
• Growth in Adjusted EBITDA: $120.9 million for 2025 (up from $113.8 million) and $33.7 million for Q4 2025 (up from $24.3 million).
• Robust new restaurant expansion: 64 system-wide restaurants opened in 2025, contributing to a total of 633 across 32 states.
• Improved income from operations margin in Q4 2025: 2.9% from 1.5% in Q4 2024.
• Increased Restaurant level operating profit margin in Q4 2025: 19.0% from 18.8% in Q4 2024.
• Positive same-restaurant traffic growth for the full year 2025 (0.5%).
• Long-term opportunity identified for over 2,200 restaurants across the U.S.
• Reiterated long-term annual financial targets: low double-digit percentage unit growth, ~3.5% same-restaurant sales growth, mid-teens restaurant sales growth, and mid-teens Adjusted EBITDA percentage growth.

Negatives

• Same-restaurant traffic growth was negative 1.9% in Q4 2025.
• Income from operations decreased to $27.5 million in 2025 from $38.9 million in 2024.
• Income from operations margin decreased to 2.3% in 2025 from 3.9% in 2024.
• Restaurant level operating profit margin decreased to 18.5% in 2025 from 20.1% in 2024.
• Franchise revenues decreased in 2025 ($10.3 million) compared to 2024 ($11.5 million) and 2023 ($14.4 million).
• Adjusted EBITDA margin decreased to 9.9% in 2025 from 11.2% in 2024.
• Net income margin decreased to 1.6% in 2025 from 1.9% in 2024.

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.
• Inability to effectively manage growth.
• Potential negative impacts on sales at existing restaurants as a result of opening new restaurants in existing markets.
• A decline in visitors to any of the retail centers, lifestyle centers, or entertainment centers where 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.
• Inability to compete effectively for customers.
• Vulnerability to food safety and food-borne illness concerns.
• Unsuccessful financial performance of franchisees, limited control over franchisee operations, inability to maintain good relationships with franchisees, and conflicts of interest with franchisees.
• The geographic concentration of the system-wide restaurant base in the southeast portion of the United States.
• Damage to reputation and negative publicity.
• Inability or failure to recognize, respond to and effectively manage the accelerated impact of social media and artificial intelligence.
• Limited number of suppliers and distributors for several frequently used ingredients and shortages or disruptions in the supply or delivery of such ingredients.
• Information technology system failures or breaches of network security.
• 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.
• Potential liability with gift cards under the property laws of some states.
• Failure to enforce and maintain trademarks and protect other intellectual property.
• Litigation with respect to intellectual property assets.
• Dependence on executive officers and certain other key employees.
• Inability to identify, hire, train and retain qualified individuals for the workforce.
• Failure to obtain or to properly verify the employment eligibility of employees.
• Failure to maintain corporate culture as the company grows.
• Unionization activities among 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 the sale of alcoholic beverages.
• Costly and complex compliance with federal, state and local laws, including trade and tax policies.
• Changes in accounting principles applicable to the company.
• Vulnerability to natural disasters, unusual weather conditions, pandemic outbreaks, political events, war and terrorism.
• Inability to secure additional capital to support business growth.
• Level of indebtedness.
• Failure to comply with covenants under the credit facility.
• Uncertainty regarding the Russia and Ukraine war, war and unrest in the Middle East and the related impact on macroeconomic conditions, including inflation.

Future Outlook

For fiscal year 2026, First Watch projects same-restaurant sales growth between 1% to 3%, total revenue growth of 12%-14% (including a 1.0% impact from 2025 acquisitions), and Adjusted EBITDA in the range of $132 million to $140 million (including a $2.0 million impact from 2025 acquisitions). The company plans to open 59 to 63 new system-wide restaurants, including 3 company-owned restaurant closures, and anticipates capital expenditures between $150.0 million to $160.0 million. Long-term targets include low double-digit percentage unit growth, ~3.5% same-restaurant sales growth, mid-teens restaurant sales growth, and mid-teens Adjusted EBITDA percentage growth, with a long-term opportunity for over 2,200 restaurants.

Management Comments

• "2025 was a year of significant progress on a number of fronts for First Watch. In addition to continuing our industry-leading new restaurant growth of nearly 11%, we increased total revenues by more than 20%, which included same-restaurant sales growth of 3.6% and positive same-restaurant traffic."
• "As we look to 2026 and beyond, we are energized by the growth opportunities across all facets of our business, particularly the expansion of our evolving digital marketing platform."

Industry Context

StockSavvy.ai notes that First Watch's continued strong revenue growth and aggressive unit expansion strategy position it well within the competitive 'Daytime Dining' segment. The focus on fresh ingredients and a unique breakfast/brunch/lunch model aligns with broader consumer trends towards healthier and more experiential dining, potentially allowing it to capture market share from traditional full-service restaurants.

Comparison to Industry Standards

• First Watch's "Daytime Dining" concept, operating from 7 a.m. to 2:30 p.m., differentiates it from traditional full-service restaurants.
• The company's industry-leading new restaurant growth of nearly 11% in 2025 demonstrates a robust expansion strategy compared to many established restaurant chains that typically see lower single-digit unit growth.
• The long-term target of over 2,200 restaurants across the U.S. suggests a significant untapped market opportunity, indicating a more aggressive growth outlook than many mature restaurant concepts.
• The company's recognition as #1 Best Breakfast by Newsweek's Readers Choice Awards 2025 and #1 Most Loved Workplace in America by the Best Practice Institute in 2025 and 2024 highlights strong brand perception and employee satisfaction, which are key competitive advantages in the restaurant industry.

Stakeholder Impact

• Shareholders: Positive impact due to strong revenue growth, increased net income, and positive future outlook, potentially leading to increased share value.
• Employees: Positive impact from continued unit growth, suggesting more job opportunities and a stable work environment, reinforced by being named a "Most Loved Workplace."
• Customers: Continued expansion provides more access to First Watch's "Daytime Dining" concept, with a focus on fresh ingredients and evolving menu items.
• Franchisees: Continued system-wide growth and brand strength benefit existing and future franchisees, though the filing notes risks related to franchisee performance and relationships.

Next Steps

• Host a conference call and webcast on February 24, 2026, at 8:00 AM ET to discuss financial results.
• Continue expansion with 59 to 63 new system-wide restaurants in fiscal year 2026.
• Invest $150.0 million to $160.0 million in capital expenditures primarily for new restaurant projects and planned remodels in fiscal year 2026.
• Expand the evolving digital marketing platform.

Key Dates

Recommendation

First Watch demonstrates consistent, strong top-line growth and aggressive unit expansion, significantly outperforming many peers in the restaurant sector. Despite some full-year margin compression, Q4 2025 showed strong improvements in income from operations and restaurant-level operating profit margins, coupled with a positive 2026 outlook for continued revenue and Adjusted EBITDA growth. The company's unique 'Daytime Dining' concept, strong brand recognition, and clear long-term growth strategy to reach over 2,200 restaurants make it an attractive investment for long-term capital appreciation, warranting a strong buy recommendation.

Keywords

First Watch, FWRG, Restaurant Group, Daytime Dining, Breakfast, Brunch, Lunch, Financial Results, SEC Filing, Earnings, Revenue Growth, Same-Restaurant Sales, Adjusted EBITDA, New Restaurant Openings, Restaurant Industry, Casual Dining, Q4 2025, Fiscal Year 2025, 2026 Outlook