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What changed in First Watch Restaurant Group, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of First Watch Restaurant Group, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+361 added−403 removedSource: 10-K (2026-02-24) vs 10-K (2025-03-11)

Top changes in First Watch Restaurant Group, Inc.'s 2025 10-K

361 paragraphs added · 403 removed · 307 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

64 edited+16 added−13 removed25 unchanged
Biggest changeIn addition to this flexibility, we support our employees with healthcare benefits, a 401(k) plan, tuition reimbursement, family leave and other assistance, including but not limited to: • Backup childcare and eldercare available for all employees, at all levels • Our “You First” Emergency Assistance Fund • A text-based telemedicine platform with no out-of-pocket expenses, for all employees regardless of insurance plan • Complimentary access to the Calm App (for meditation, relaxation and sleep) for all employees and five of their loved ones • No-cost high school diploma program • Discounts on thousands of items from sporting tickets and computers to cars and daycare • Pet insurance 8 Table of Contents In 2020, we created the “You First” Emergency Assistance Fund, which provides financial support to employees and their immediate families during times of significant hardship following the impacts of qualifying disasters.
Biggest changeIn addition to this flexibility, we 9 Table of Contents support our employees with healthcare benefits, a 401(k) plan, tuition reimbursement, family leave and other assistance, including but not limited to: • Discounted and Company-subsidized backup childcare and eldercare available for all employees, at all levels • “You First” Emergency Assistance Fund • Free telemedicine for all employees regardless of insurance plan enrollment • Complimentary access to the Calm App (for meditation, relaxation and sleep) for all employees and five of their loved ones • 24/7 access to confidential counseling and concierge services through the Company’s Employee Assistance Program for all employees and their family members, as well as free personal and professional coaching • No-cost high school diploma program • Discounts on thousands of items from sporting tickets and computers to cars and daycare • Pet insurance Including Our Employees At First Watch, we are committed to making days brighter by creating a culture where our teams and our customers feel valued and celebrated for who they are and the differences they bring to the table.
While we believe that organic growth of awareness contributes to our local feel, we also recognize the potential of strategically marketing in appropriate channels to accelerate our brand awareness. We continue to build expertise in, and deploy tested strategies for, utilizing targeted digital channels to reach certain attractive customer segments and build top-of-mind awareness.
While we believe that organic growth of brand awareness contributes to our local feel, we also recognize the potential of strategically marketing in appropriate channels to accelerate our brand awareness. We continue to build expertise in, and deploy tested strategies for, utilizing targeted digital channels to reach certain attractive customer segments and build top-of-mind awareness.
The initial franchise fee for each restaurant is $35,000 to $40,000. Franchisees are required to pay 4.0% of franchised restaurant sales in royalties and contribute 1.0%-3.0% of franchised restaurant sales to a system fund, which is used for advertising, marketing and public relations programs and materials on a system-wide basis.
The initial franchise fee for each restaurant is $35,000 to $40,000. Franchisees are required to pay 4.0% of franchised restaurant sales in royalties and contribute 1.0% to 3.0% of franchised restaurant sales to a system fund, which is used for advertising, marketing and public relations programs and materials on a system-wide basis.
We do not use microwave ovens, heat lamps or deep fryers in our kitchens. At First Watch, we are driven by a pursuit of freshness as is highlighted by our culinary and sourcing philosophy to “Follow the Sun.” With this philosophy, our menu, which is inspired by the seasons, changes five times per year.
We do not use microwave ovens, heat lamps or deep fryers in our kitchens. At First Watch, we are driven by a pursuit of freshness as is highlighted by our culinary and sourcing philosophy to “Follow the Sun.” With this philosophy, our menu, which is inspired by the seasons, changes four to five times per year.
The average annual sales volumes of our new restaurants outpace the system average and we expect to sustain the performance through quality real estate selection and the introduction of features and operational practices designed to efficiently serve more demand. Acquisitions of Franchise-Owned Restaurants Our long-term growth strategy includes the acquisitions of First Watch restaurants operated by certain of our franchisees.
The average annual sales volumes of our new restaurants outpace the system average, and we expect to sustain the performance through quality real estate selection and the introduction of features and operational practices designed to efficiently serve more demand. Acquisitions of Franchise-Owned Restaurants Our long-term growth strategy includes the acquisition of First Watch restaurants operated by certain of our franchisees.
In addition, we are also subject to the Fair Labor Standards Act, the Immigration Reform and Control Act of 1986, the Americans with Disabilities Act and various federal and state laws governing such matters as minimum wages, exempt versus non-exempt, overtime, unemployment tax rates, workers’ compensation rates, citizenship requirements and other working conditions.
In addition, we are also subject to the Fair Labor Standards Act, the Immigration Reform and Control Act of 1986, the Americans with Disabilities Act and various federal and state laws governing such matters as minimum wages, exempt versus non-exempt status, overtime, unemployment tax rates, workers’ compensation rates, citizenship requirements and other working conditions.
Our Culture: You First For four decades, we have cultivated an organizational culture built on our foundational concept of “You First,” which puts serving others above all else. As a company, we put our employees first and empower them to do whatever it takes to put our customers first.
Our Culture: You First For over four decades, we have cultivated an organizational culture built on our foundational concept of “You First,” which puts serving others above all else. As a company, we put our employees first and empower them to do whatever it takes to put our customers first.
Specific programs include: • Our certified Black Hat and Black Apron program encourages leadership development for back-of-house and front-of-house employees through financial and growth incentives. • A certified training general manager and restaurant program provides additional financial and growth opportunities for aspiring leaders, enabling us to promote more employees from within our restaurants and ensure we are delivering a best-in-class training experience to all new hires. • Regional “Come Grow With Us” events provide hourly employees who are interested in leadership the chance to learn about growth and development and get on the fast track to management. • Established in 2018, our First Watch Academy of Restaurant Management immerses new restaurant managers in our You First culture and leverages Company subject matter experts to educate these leaders on a variety of essential topics, including leadership behaviors.
Specific programs include: • Our certified Black Hat and Black Apron program encourages leadership development for back-of-house and front-of-house employees through financial and growth incentives. • A certified training general manager and restaurant program provides additional financial and growth opportunities for aspiring leaders, enabling us to promote more employees from within our restaurants and ensure we are delivering a best-in-class training experience to all new hires. • Regional “Come Grow With Us” events provide hourly employees who are interested in leadership the chance to learn about growth and development and get on the fast track to management. • Established in 2018, our First Watch Academy of Restaurant Management (F.A.R.M) immerses new restaurant managers in our You First culture and leverages Company subject matter experts to educate these leaders on a variety of essential topics, including leadership behaviors.
These demand generation strategies have aided us to “balance out” our customer base in recent years by growing penetration with Millennial and Gen Z segments. • Customer Technology & Customer Data: We accelerated the implementation of customer data acquisition systems in order to better inform the habits and behaviors of our customers.
These demand generation strategies have aided in “balancing out” our customer base in recent years by growing penetration with Millennial and Gen Z segments. • Customer Technology & Customer Data: We accelerated the implementation of customer data acquisition systems in order to better inform us of the habits and behaviors of our customers.
With our mission of “Making days brighter at Every opportunity”, we endeavor to provide all employees with the opportunity to contribute at the highest level to ensure everyone can belong, thrive, and “Follow the Sun” to reach their full potential.
With our mission of “Making days brighter at every opportunity”, we endeavor to provide all employees with the opportunity to contribute at the highest level to ensure everyone can belong, thrive, and “Follow the Sun” to reach their fullest potential.
As evidenced by our vision to “Create Amazing Opportunities for Our People,” we also work hard to provide opportunities for advancement and meaningful relationships, and we prioritize personal and professional growth so that our people can thrive.
As evidenced by our vision to “Create Amazing Opportunities for Our People,” we also work hard to provide our employees with opportunities for advancement and meaningful relationships, and we prioritize personal and professional growth so that our people can thrive.
Excellence in restaurant-level execution, recognized by customers and reinforced by the hundreds of accolades we have received, increases the visit frequency of our customers, promotes trial by new consumers and ultimately encourages loyalty.
Excellence in restaurant-level execution, recognized by customers and reinforced by the many accolades we have received, increases the visit frequency of our customers, promotes trial by new consumers and ultimately encourages loyalty.
By using our first party data, we have been able to identify higher frequency customers and target similar customers with digital media vehicles.
In addition, by using our first party data, we have been able to identify higher frequency customers and target similar customers with digital media vehicles.
Our executives and key employees average more than 15 years of industry experience and our directors of operations have an average tenure at First Watch of approximately 10 years.
Our executives and key employees average more than 15 years of industry experience and our directors of operations have an average tenure at First Watch of approximately 8 years.
Our turnover sits well below the industry average and has improved sequentially over the last two years for both managers and hourly team members, enabling us to provide consistent and memorable dining experiences for our customers.
Our turnover measures well below the industry average and has improved sequentially over the last two years for both managers and hourly team members, enabling us to better provide consistent and memorable dining experiences for our customers.
The purpose of these in-depth sessions is to learn more about the issues most meaningful to our hourly workforce. As a result of these tours, the Company has been able to take swift action on the issues that surfaced, resulting in positive changes for both employees and customers.
The purpose of these in-depth sessions is to learn more about the issues most meaningful to our hourly workforce. As a result of these tours, we have been able to take swift action on the issues that surfaced, resulting in positive changes for both employees and customers.
Our development approach has proven that First Watch has tremendous portability across markets, with new restaurants boasting consistent and a strong average unit volume across all geographies. First Watch’s top 10% of restaurants in terms of sales, span 14 states and 22 designated market areas.
Our development approach has proven that First Watch has tremendous portability across markets, with new restaurants boasting a consistent and strong average unit volume across all geographies. First Watch’s top 10% of restaurants in terms of sales, span 13 states and 24 designated market areas.
These seasonal items are offered alongside of our award-winning chef-driven menu including elevated executions of classic favorites for breakfast, brunch and lunch, such as our protein-packed Breakfast Quinoa, Farmstand Breakfast Tacos, and Avocado Toast. Our menu also features fresh juices, that we juice each morning, including Morning Meditation and Kale Tonic.
These seasonal items are offered alongside our award-winning chef-driven menu that includes elevated executions of classic favorites for breakfast, brunch and lunch, such as our protein-packed Breakfast Quinoa Bowl, Chickichanga and Avocado Toast. Our menu also features fresh juices, that we juice each morning, including Morning Meditation and Kale Tonic.
See Item 1A.“ Risk Factors ” for discussion of risks related to seasonal and periodic fluctuations. 10 Table of Contents Corporate Information First Watch Restaurant Group, Inc. was incorporated in Delaware on August 10, 2017, under the name AI Fresh Super Holdco, Inc. We changed our name on December 20, 2019 to First Watch Restaurant Group, Inc.
See Item 1A.“ Risk Factors ” for a discussion of risks related to periodic fluctuations. Corporate Information First Watch Restaurant Group, Inc. was incorporated in Delaware on August 10, 2017, under the name AI Fresh Super Holdco, Inc. We changed our name on December 20, 2019 to First Watch Restaurant Group, Inc.
We constantly evolve our on-trend menu which highlights quality and freshness and is operationally efficient. When it comes to sourcing our produce, we are guided by a core philosophy: “Follow the Sun.” Our five highly anticipated seasonal menus drive customer frequency. This means that we welcome each season with exceptional ingredients harvested when they are most flavorful and fresh.
We constantly evolve our on-trend menu which highlights quality and freshness and is operationally efficient. When it comes to sourcing our produce, we are guided by a core philosophy: “Follow the Sun.” We believe our highly anticipated seasonal menus drive customer frequency, as we welcome each season with exceptional ingredients harvested when they are most flavorful and fresh.
In addition, the First Watch logo, website name and address and Facebook and Twitter accounts are our intellectual property. Our policy is to pursue and maintain registration of service marks and trademarks and to oppose vigorously any infringement or dilution of the service marks or trademarks.
In addition, the First Watch logo, website name and address and social media accounts are our intellectual property. Our policy is to pursue and maintain registration of our service marks and trademarks and to oppose vigorously any infringement or dilution of our service marks or trademarks.
We make available, free of charge, through our internet website, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after electronically filing such material with the Securities and Exchange Commission (“SEC”).
We make available, free of charge, through our internet website, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after electronically filing such material with the SEC.
In 2024, CEO and President, Chris Tomasso, Chief People Officer, Laura Sorensen and Chief Operations Officer, Dan Jones, hosted twenty-four separate 90 minute calls with hourly employees across the country for their fourth annual W.H.Y. Tour – their “We Hear You” listening tour.
In 2025, CEO and President, Chris Tomasso, Chief People Officer, Laura Sorensen and Chief Operations Officer, Dan Jones, hosted twenty-three separate 90-minute calls with hourly employees across the country for their fifth annual W.H.Y. Tour – their “We Hear You” listening tour.
Since implementation of these systems, we have gathered customer information for over 17.9 million unique customer profiles, 7.7 million of whom have opted for direct communication from First Watch. The advances in these foundational systems have allowed us to learn more about our customers and the behaviors that ultimately drive lifetime customer value.
Since we implemented these systems, we have gathered information for millions of customer profiles, approximately 7.6 million of whom have opted for direct communication from First Watch. The advances in these foundational systems have allowed us to learn more about our customers and the behaviors that ultimately drive lifetime customer value.
We operate on a “No Nights Ever” model and work to get our restaurant employees “out the door by four”– which allows our teams to enjoy evenings with their family and friends, and an improved quality of life. This one-shift model provides our employees with a work-life balance that is simply out of reach for most restaurant industry employees.
We operate on a “No Nights Ever” model and work to get our restaurant employees “out the door by four”– which allows our teams to enjoy evenings with their family and friends, and an improved quality of life. This one-shift model provides our employees with a work-life balance that does not exist for many employees in the restaurant industry.
In addition, successful new platform introductions such as our Fresh Juice program, our Shareables, our alcohol program and our premium iced coffees add incremental sales opportunities and capitalize on growing trends. ◦ Offer Alcohol as Only First Watch Can .
In addition, successful platform introductions such as our Fresh Juice program, our Shareables, our alcohol program and our premium iced coffees add incremental sales opportunities and capitalize on growing trends.
New menu changes, employee benefits, training, operational practices and more efficient tools have been introduced as a direct result of feedback from each annual tour, reinforcing the Company’s culture of listening to its employees and taking action on the issues that matter the most to them.
New menu changes, employee benefits, training, operational practices, and system enhancements to improve service and operations, have been introduced as a direct result of feedback from each annual tour, reinforcing our culture of listening to our employees and taking action on the issues that matter the most to them.
This program in turn empowers these women leaders to reinvest in their communities. • Pediatric Cancer Research: Through each sale of a First Watch kid’s meal, we donate a portion of proceeds to the V Foundation in order to support and advance pediatric cancer research. To date, we have donated $1.4 million towards these important efforts.
This program in turn empowers these women leaders to reinvest in their communities. • Pediatric Cancer Research: We donate a portion of the proceeds from each sale of a First Watch kid’s meal to the V Foundation in order to support and advance pediatric cancer research.
We focus on increasing our engagement with social media platforms in order to generate brand awareness and also to gather information we can then apply to future marketing efforts. 7 Table of Contents Franchise Program As of December 29, 2024, we ha d 11 franchisees that operat ed 83 rest aurants and our existing franchisees had 29 total new restaurant development obligations.
We continue to focus on increasing our engagement with social media platforms in order to generate brand awareness and also to gather information we can then apply to future marketing efforts. Franchise Program As of December 28, 2025, we ha d 9 franchisees that operated 73 rest aurants and our existing franchisees had 17 total new restaurant development obligations.
Our rotating seasonal menu is commonly cited by our customers as a core element of the First Watch experience and has included favorites such as the Sunny Seoul Hash, Strawberry Tres Leches French Toast and the Brooklyn Breakfast Sandwich.
Our rotating seasonal menu is commonly cited by our customers as a core element of the First Watch experience and has included favorites such as the Parmesan and Prosciutto Toast, Chimichurri Steak and Eggs Hash, and the Brooklyn Breakfast Sandwich.
Our selected vendors undergo inspections to ensure that products purchased conform to our standards. Our Quality Assurance department requires third-party supplier audits or Global Food Safety Initiative certification for all food distributors and manufacturing facilities to ensure good manufacturing practices, food safety, pest control, sanitation, training, regulatory compliance and food defense systems are in place.
Additionally, our Quality Assurance department conducts on-site visits and requires third-party supplier audits or Global Food Safety Initiative certification for all food distributors and manufacturing facilities to help ensure good manufacturing practices, food safety, pest control, sanitation, training, regulatory compliance and food defense systems are in place.
(“Culture and Food Experience”) training program in the restaurants, alongside experienced managers. Training for all in-restaurant management positions was also enhanced to clearly define and delineate roles in order to drive both results and engagement. New hourly employees participate in at least three days of initial onboarding training and shadowing.
Training for all in-restaurant management positions, as well as multi-unit leadership, was also enhanced to clearly define and delineate roles in order to drive both results and engagement. New hourly employees participate in at least three days of initial onboarding training and shadowing.
Drive Restaurant Traffic and Build Sales Our attractive return on invested capital starts with an intention to build sales and traffic through a focus on the core elements of the First Watch experience: serving incredible food, with memorable service, in an inviting atmosphere. • Delivering an Excellent On-Premise Dining Experience.
Drive Restaurant Traffic and Build Sales Our return on invested capital reflects our disciplined focus on building sales and traffic through the core elements of the First Watch experience - serving high-quality food, delivering memorable service, and providing an inviting atmosphere. • Delivering an Excellent On-Premise Dining Experience.
(“First Watch Academy of Restaurant Management”), to which we invite managers-in-training for a week-long immersive brand experience where we teach everything from our history and cultural pillars to leadership and management tools. We have enhanced this training program to also focus on building a more diverse and inclusive team. In addition, managers-in-training also complete a comprehensive 10-week C.A.F.E.
(“First Watch Academy of Restaurant Management”), to which we invite managers-in-training for a week-long immersive brand experience where we teach everything from our history and cultural pillars to leadership and management tools. In addition, newly hired managers-in-training also complete a comprehensive 10-week C.A.F.E. (“Culture and Food Experience”) training program in the restaurants, alongside experienced managers.
As consumers increasingly seek higher quality breakfast, brunch and lunch experiences, we believe we are well-positioned to compete with a wide range of national, regional and local establishments that operate during our hours of operation.
As consumers increasingly seek higher quality breakfast, brunch and lunch experiences, we believe we are well-positioned to compete with a wide range of national, regional and local establishments that operate during our hours of operation. More directly, we do not believe there is a comparable offering within our segment that operates at the scale of First Watch.
To date we have implemented technologies that have enhanced accessibility by adding the functionality for direct ordering of takeout as well as third party delivery integrations. In 2024 and 2023, our total off-premises sales accounted for 17.5% and 18.3%, respectively, of our total restaurant sales. ◦ In-restaurant dining sales continue to strengthen, indicating continued customer demand for experiences and connection.
To date we have implemented technologies that have enhanced accessibility by adding the functionality for direct ordering of takeout as well as third-party delivery 6 Table of Contents integrations. In 2025 and 2024, our total off-premises sales accounted for 19.0% and 17.5%, respectively, of our total restaurant sales.
At December 29, 2024, we had 11 franchisees operating 83 restaurants with 29 total new restaurant development obligations. At December 29, 2024, 26 franchise-owned restaurants are subject to our option to purchase.
At December 28, 2025, we had 9 franchisees operating 73 restaurants with 17 total new restaurant development obligations. At December 28, 2025, 12 franchise-owned restaurants are subject to our option to purchase.
We believe our approach and operating model have enabled us to retain and attract the best and brightest employees in the industry and are key factors in our ability to meet the growing demand we are seeing across the country.
We believe our approach and operating model have enabled us to retain and attract the best and brightest employees in the industry and are key factors in our ability to meet our growing demand across the country. As a result, we are proud of the many people-focused awards and accolades we have received over the past few decades.
This daytime focus also provides us with a competitive advantage allowing us to attract and retain employees who are passionate about hospitality and drawn to our “No Night Shifts Ever” approach, among other attractive benefits. As of December 29, 2024, we had a to tal of 572 restaurants across 29 states, 489 of which were company-owned and 83 were franchise-owned.
This daytime focus also provides us with a competitive advantage, allowing us to attract and retain employees who are passionate about hospitality and drawn to our “No Night Shifts Ever” approach, among other attractive benefits.
Our ongoing career growth opportunities, along with our culture and hours, are a key component to our employee value proposition, which fuels our ability to both attract and retain great talent. 9 Table of Contents Retaining Our Employees All of these aspects, and many more, contribute to our award-winning culture and employee retention.
Our ongoing career growth opportunities, along with our culture and hours, are key components to our employee value proposition, which fuels our ability to both attract and retain great talent. Retaining Our Employees Our focus on employee engagement and support contributes to our award-winning culture and employee retention.
We see this as a long-term opportunity to drive increased visit frequency as we have the ability to build new customer technology features that elevate the customer experience.
We see this as a long-term opportunity to drive increased visit frequency as we have the ability to build new customer technology features that elevate the customer experience. 7 Table of Contents Operations Restaurant Staff As of December 28, 2025, we had more than 17,500 restaurant employees.
In February 2024, we completed the roll-out of pay-at-the-table technology at all company-owned restaurants. Through a QR code on our receipts, customers can now seamlessly pay using Apple Pay, Google Pay or a credit or debit card, reducing bottlenecks at host stands, particularly during peak weekend hours. • Continued Menu Innovation.
Through a QR code on our receipts, customers can seamlessly pay using Apple Pay, Google Pay or a credit or debit card, reducing bottlenecks at host stands, particularly during peak weekend hours.
Growth Strategies New Restaurant Openings We believe First Watch has the potential for more than 2,200 restaurants in the continental United States.
Growth Strategies New Restaurant Openings We believe First Watch has the potential for more than 2,200 restaurants in the continental United States. In 2021, First Watch was recognized by FSR Magazine as the fastest-growing full-service restaurant company in the United States based on unit growth.
The #beabetterhuman initiative is comprised of monthly live, interactive in-person and online workshops fostering personal and professional development. The #beabetterhuman campaign was designed to educate and develop our workforce, raise awareness and influence change.
For five consecutive years, we have leveraged our #beabetterhuman initiative to take our people-focused approach to a new level. The #beabetterhuman initiative is comprised of monthly interactive in-person and online training workshops fostering personal and professional development. The #beabetterhuman campaign was designed to educate and develop our workforce, raise awareness of key issues impacting our employees, and influence positive change.
Since 2022, more than 85% of the 510 employees promoted to general manager at our corporate-owned restaurants were promoted from within. The average tenures for our directors of operations, regional vice presidents and field operations vice presidents are 8 years, 13 years and 19 years, respectively. First Watch takes a 360-degree personal/professional approach to career advancement and development.
Developing Our Employees Professional development and growth are a way of life at First Watch. A majority of our general managers at corporate-owned restaurants are promoted from within. The average tenures for our directors of operations, regional vice presidents and field operations vice presidents are approximately 8 years, 12 years and 13 years, respectively.
Our #beabetterhuman campaign also inspired the opportunity for employees to give back to the community through our executive-sponsored and employee-led Kale Krew, which coordinates multiple volunteer opportunities annually. Developing Our Employees Professional development and growth are a way of life at First Watch.
We continue to build upon the success of the program with expanded development offerings to both our Home Office employees and restaurant management teams. Our #beabetterhuman campaign also inspired the opportunity for Home Office employees to give back to the community through our executive-sponsored and employee-led Kale Krew, which coordinates multiple volunteer opportunities annually.
We believe the composition of our teams reflect the diversity of our restaurant communities across the country, allowing us to better anticipate market trends and address the needs of our customers. And while our work is ongoing, we’re dedicated to building on our “You First” commitment and unlocking possibilities for each team member and the communities we serve.
We believe the composition of our teams reflects the diversity of our restaurant communities across the country, allowing us to better anticipate market trends and address the needs of our customers.
In 2022 we implemented kitchen display screens in all company-owned 5 Table of Contents restaurants to simplify the employee experience and improve back-of house efficiency. Along with many other operational initiatives, processes and procedures, we continue to see opportunity to use technology to elevate the customer experience and simplify tasks for our teams.
In-restaurant dining sales continue to strengthen, indicating continued customer demand for experiences and connection. Along with many other operational initiatives, processes and procedures, we continue to see opportunity to use technology to elevate the customer experience and simplify tasks for our teams. In February 2024, we completed the roll-out of pay-at-the-table technology at all company-owned restaurants.
We contract with third-party inspectors to regularly monitor restaurant performance through unannounced non-biased food safety assessments with program standards that meet or exceed those of local health departments. These inspections are intended to achieve active managerial control in our restaurants in an effort to reduce risk factors and maintain a strong food safety culture.
Food preparation and cleaning procedures are defined, monitored and maintained by our Quality Assurance department. We contract with third-party inspectors to regularly monitor restaurant performance through unannounced non-biased food safety assessments with program standards that meet or exceed those of local health departments.
Most notably, First Watch is proud of two key efforts to give back in a meaningful way: • Project Sunrise: Through this initiative of passion, we source our coffee beans from women-owned farms in Colombia, and we pay an annual quality incentive bonus to farmers to further support their high-quality production.
In addition to various local philanthropic efforts in the communities we serve, First Watch focuses its giving through key efforts designed to create positive impact both externally and within our organization: • Project Sunrise: Through this initiative, we source our coffee beans from women-owned farms in Colombia, and we pay an annual quality incentive bonus to farmers to further support their high-quality production.
We have built our brand on our commitment to operational excellence, our culinary mission centered around a fresh, continuously evolving menu, and our “You First” culture. Our focus on one daytime shift enables us to optimize restaurant operations while generating an average unit volume of $2.2 million p er restaurant in 2024 in only 7.5 hours per day.
Our focus on one daytime shift enables us to optimize restaurant operations while generating an average unit volume of $2.3 million per restaurant in 2025 in only 7.5 hours per day.
Our reports and other materials filed with the SEC are also available at www.sec.gov. The reference to these website addresses does not constitute incorporation by reference of the information contained on the websites and should not be considered part of this Annual Report on Form 10-K.
The references to these website addresses are included as textual references only, and the information contained on or accessible through these websites is not incorporated by reference into, and should not be considered part of, this Annual Report on Form 10-K or any of our other SEC filings.
This culture was also a key factor in the Company’s achievement of being recognized as 2024’s #1 Most Loved Workplace in the United States by Newsweek and the Best Practice Institute.
This culture was also a key factor in the Company’s achievement of being named a Top 100 Most Loved Workplace® for four consecutive years by the Best Practice Institute, and in 2025, being named the #1 Most Love Workplace for the second year in a row, as featured in The Wall Street Journal.
More directly, we do not believe there is a comparable offering within our segment that operates at the scale of First Watch and we view our primary competition as a network of independent restaurants that also serve breakfast and lunch in neighborhoods across the United States. Seasonality Our quarterly results of operations are subject to seasonal fluctuations.
We view our primary competition as a network of independent restaurants that also serve breakfast and lunch in neighborhoods across the United States. 11 Table of Contents Seasonality Our quarterly results of operations are subject to fluctuations due to the timing of holidays, weather conditions and the number of new restaurant openings.
Operations Quality and Food Safety First Watch emphasizes high food quality and a commitment to food safety in each restaurant through the careful training and supervision of personnel and by following rigorous quality and cleanliness standards. Food preparation and cleaning procedures are defined, monitored and maintained by our quality assurance department.
To help ensure freshness, most of our restaurants accept produce and broadline distribution deliveries at least three times per week. Quality and Food Safety First Watch emphasizes high food quality and a commitment to food safety in each restaurant through the careful training and supervision of personnel and by following rigorous quality and cleanliness standards.
Unless the context otherwise requires, “we,” “us,” “our,” “First Watch,” the “Company,” “Management” and other similar references refer to First Watch Restaurant Group, Inc. and, unless otherwise stated, all of its subsidiaries. Overview Since opening our doors in 1983, we have been a pioneer in Daytime Dining, serving made-to-order breakfast, brunch and lunch using the freshest of ingredients.
Item 1. Business First Watch Restaurant Group, Inc. is a Delaware holding company. Unless the context otherwise requires, “we,” “us,” “our,” “First Watch,” the “Company,” “Management” and other similar references refer to First Watch Restaurant Group, Inc. and, unless otherwise stated, all of its subsidiaries.
Our general managers and directors of operations conduct in-restaurant training for our staff who also train online through our Virtual Learning Academy. Purchasing and Distribution Our Supply Chain department manages and negotiates directly with qualified, national suppliers and distributors with the dual goals of securing the supply of high quality, fresh products and controlling cost.
Our general managers and directors of operations conduct in-restaurant training for our staff who also train online through our Virtual Learning Academy.
To that end, during 2024, we acquired 22 o perating restaurants along with development and territory rights in two separate transactions. We have also signed agreements to acquire a total of 19 additional restaurants from franchisees.
To that end, during 2025, we acquired 19 o perating restaurants along with development and territory rights in two separate transactions. We believe the Company’s operation of the restaurants acquired from our franchisees as well as development in the reacquired territory, provides substantial opportunity to realize new Company value.
This is the third consecutive year in which the Company has been included in Newsweek’s Top 100 Most Loved Workplaces®, a designation that was a result of an assessment of First Watch’s people practices along with an independent survey of approximately 1,000 of our employees.
This designation was based on an assessment of First Watch’s people practices along with an independent survey of approximately 1,000 of our employees.
As we have finalized the initial stage of adding alcohol to the majority of our system, our alcohol platform offers the opportunity to innovate alongside our constantly evolving culinary platforms and seasonal menus. • Increasing Our Brand Awareness. For over 40 years, our awareness has grown primarily through word-of-mouth as our service, menu and environment created loyal fans.
We continue to seek ways to enhance our seasonal menu and in early 2026, we relaunched both a new seasonal and core menu rooted in feedback from both our employees and our customers. • Increasing Our Brand Awareness. For over 40 years, our brand awareness has grown primarily through word-of-mouth as our service, menu and environment created loyal fans.
With over 100 new restaurants in our real estate development pipeline, we need a robust GM-ready talent bench.
While we prioritize personal and professional growth because we believe it is simply the right thing to do and it is part of our culture, it also makes our aggressive growth plans possible. With over 100 new restaurants in our real estate 10 Table of Contents development pipeline, we need a robust GM-ready talent bench.
A portion of each kid’s meal sold by our restaurants benefits this program. Since its inception, this fund has provided employees with over with over $1 million dollars in tax-free hardship grants.
The fund is intended to support employees and their immediate families during their times of most significant need and is funded through a portion of the proceeds from each kid’s meal sale, along with contributions from the Company, our employees and others. Since its inception, this fund has provided our employees with ove r $1.1 million in hardship grants.
Our growth strategy targets an accelerating pace of new system-wide restaurant development with a long-term goal of annual percentage growth in the low double digits. In selecting new locations, we evaluate specific market characteristics, demographics, traffic patterns, co-tenants and growth potential.
In 2025, we continued to realize that potential by openin g 64 new company-owned and franchise-owned restaurants, which we collectively refer to as “system-wide” restaurants, acros s 23 s tates. Our growth strategy contemplates increasing the annual number of new system-wide restaurant openings. In selecting new locations, we evaluate specific market characteristics, demographics, traffic patterns, co-tenants and growth potential.
To ensure freshness, most of our restaurants accept produce and broadline distribution deliveries at least three times per week. Management Information Systems All our restaurants use digital management information systems, which we believe are scalable to support our future growth plans.
We also maintain a formal process for reviewing vendors’ food safety practices to ensure they meet or exceed industry standards, as described above. 8 Table of Contents Management Information Systems All our restaurants use digital management information systems, which we believe are scalable to support our future growth plans.
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Item 1. Business First Watch Restaurant Group, Inc. is a Delaware holding company that was acquired by funds affiliated with or managed by Advent International L.P. (“Advent”) in August 2017 (the “Advent Acquisition”).
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Overview Since opening our doors in 1983, we have been a pioneer in Daytime Dining, serving made-to-order breakfast, brunch and lunch using the freshest of ingredients. We have built our brand on our commitment to operational excellence, our culinary mission centered around a fresh, continuously evolving menu, and our “You First” culture.
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As a result, we are proud of the many people-focused awards and accolades we have received over the past few decades, most recently including the following: • Ranked the #1 Most Loved Workplace® in 2024 by Newsweek and the Best Practice Institute • Recognized with ADP’s Culture at Work Award (2022) • Named the top restaurant brand in Yelp’s inaugural list of the top 50 most-loved brands in the U.S (2023) • Ranked # 1 in a five-year study of employee surveys on Glassdoor published by William Blair for work/life balance and we were in the top 10 in overall employee satisfaction, among casual dining concepts (2022) 4 Table of Contents We also extend our You First culture by giving back to important organizations and causes that are meaningful to our people.
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As of December 28, 2025, we had a to tal of 633 restaurants across 32 states, 560 of which were company-owned and 73 of which were franchise-owned.
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In 2021, First Watch was recognized by FSR Magazine as the fastest-growing full-service restaurant company in the United States based on unit growth and in 2024, we continued to realize that potential by openin g 50 new company-owned and franchise-owned restaurants, which we collectively refer to as “system-wide” restaurants, across 19 states.
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For four consecutive years, First Watch has been named a Top 100 Most Loved Workplace® by the Best Practice Institute , and in 2025, was named the #1 Most Loved Workplace for the second year in a row, as featured in The Wall Street Journal .
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See Note 22, Subsequent Events , in the accompanying notes to the consolidated financial statements included in Item 8 of Part II of this Form 10-K for additional information. We believe the Company’s operation of the restaurants acquired from our franchisees as well as development in the reacquired territory provides substantial opportunity to realize new Company value.
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Also, in 2025, First Watch was named one of Yelp’s Most Loved Brands nationwide. 5 Table of Contents We also extend our You First culture by giving back to important organizations and causes that are meaningful to our people and our communities.
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Our alcohol platform is unique and reflects our culinary innovation through combinations of fresh juices and ingredients with a variety of liquors. We have continued to expand on this strategic initiative and acquire the necessary licenses. As of December 29, 2024, our alcohol menu was offered in about 90% of our system-wide restaurants.
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As of December 28, 2025, we have donated approximately $2.0 million towar d this important effort. • The You First Fund: Established in 2020, the You First Fund provides grants to eligible team members experiencing personal hardship related to qualifying disasters.
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Restaurant management incentive plans provide strong motivation to meet and exceed standards. In addition, as part of our overall food quality assurance, we have a process in place to review vendors’ food safety practices to ensure they meet or exceed industry standards. 6 Table of Contents Restaurant Staff As of December 29, 2024, we had more than 15,000 restaurant employees.
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In 2025 we relaunched our customer facing technology platforms including a new ordering system, a new waitlist experience as well as a redeveloped app that we believe provides enhanced tools and experiences to remove bottlenecks and deliver a better experience.
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Most recently the fund was leveraged to assist hundreds of our Southeast-based employees after the hurricanes of 2024 caused flooding and wind damage in Florida, Georgia, North and South Carolina.
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Amongst a variety of other benefits, customers can choose to auto check-in from the waitlist as they approach the restaurant, utilize new nutrition and allergen filters, and store personalized offers in a dynamic mobile wallet. We view these innovations as critical to maintaining relevancy across generations and ensuring that First Watch evolves with societal trends. • Continued Menu Innovation.
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Including Our Employees At First Watch, we are committed to making days brighter by creating a culture where our teams and our customers feel valued and celebrated for who they are and the differences they bring to the table.
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Our longstanding practice of rotating our menu four to five times annually, serves as an ongoing source of innovation and learning as we continue to learn what items are embraced by our customers and teams, allowing us the ability to use past items to refresh and improve our core menu.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese risks include the following: Risks Related to Our Business and Industry • our vulnerability to changes in economic conditions and other factors, many of which are largely outside of our control • our inability to open new restaurants in new and existing markets or to operate them as profitably as we have experienced in the past • our inability to effectively manage our growth • opening new restaurants may adversely impact sales at our and our franchisees’ existing restaurants • the number of visitors to areas where our restaurants are located may decline • lower than expected same-restaurant sales growth • unsuccessful marketing programs or limited-time menu offerings 11 Table of Contents • shortages or disruptions in the supply or delivery of frequently used food items or increases in the cost of our frequently used food items • unsuccessful new restaurant openings • our inability to compete successfully with other breakfast and lunch restaurants • our vulnerability to food safety and food-borne illness concerns • issues with our existing franchisees, including their financial performance, our lack of control over their operations and conflicting business interests • our reliance on a small number of suppliers for a substantial amount of our food and coffee • geographic concentration • damage to our reputation and negative publicity, even if unwarranted • our inability to effectively manage the accelerated impact of social media and artificial intelligence Risks Related to Information Technology and Intellectual Property • our failure to adequately protect our network security • compliance with federal and state laws and regulations relating to privacy, data protection, advertising and consumer protection • potential state property law liability with our gift cards • our failure to enforce and maintain our trademarks and other intellectual property • adverse litigation outcomes with respect to our intellectual property rights Risks Related to Employees and the Workforce • our inability to identify qualified individuals for our workforce • our failure to maintain our corporate culture • potential unionization activities • risks associated with our sustainability activities, including ESG matters Legal and Regulatory Risks • compliance with federal and local environmental, labor, employment, food safety, franchise, zoning and other applicable laws and regulations • the distraction and expense of litigation • increased labor and healthcare costs due to changes in laws and regulations • risks associated with leasing properties subject to long-term and non-cancelable leases • compliance with the laws and regulations applicable to public companies • volatility in our results of operations caused by fluctuations in our tax obligations and effective tax rate and realization of our deferred tax assets • risks related to our sale of alcoholic beverages Risks Related to Accounting and Financial Reporting Matters • impairment in the carrying value of our goodwill or indefinite-lived intangible assets • risks associated with changes to accounting estimates • our inability to effectively manage our internal control over financial reporting Risks Related to Our Indebtedness • our level of indebtedness and our duty to comply with covenants under our Credit Agreement Risks Related to Our Company and Organizational Structure • the interests of Advent may differ from those of our public stockholders • our reliance on our operating subsidiaries • risks associated with our status as an emerging growth company • risks associated with the anti-takeover provisions of Delaware law, our amended and restated certificate of incorporation and bylaws • risks associated with exclusive forum jurisdiction in the Court of Chancery in the State of Delaware 12 Table of Contents Risks Related to Ownership of Our Common Stock • the market price of our common stock could be reduced by future offerings of debt or equity securities • risks associated with our status as a controlled company with highly concentrated ownership of common stock • our expectation not to pay any dividends on our common stock in the foreseeable future • possible significant fluctuations in our quarterly results of operations that could fall below the expectations of securities analysts and investors • sales of substantial amounts of common stock in the public markets by Advent • dilutive impact from grants under our equity incentive plans General Risk Factors • the loss of our executive officers or other key employees • lack of access to additional capital to support business growth • changes in accounting principles or estimates • inadequate levels of insurance coverage against claims Risks Related to Our Business and Industry We are vulnerable to changes in economic conditions and consumer preferences that could have a material adverse effect on our business, financial condition and results of operations.
Biggest changeThese risks include the following: Risks Related to Our Business and Industry • our vulnerability to changes in economic conditions, consumer preferences and other factors, many of which are largely outside of our control 12 Table of Contents • our inability to open new restaurants in new and existing markets or to operate them as profitably as we have experienced in the past • our inability to effectively manage our growth • opening new restaurants in existing markets may adversely impact sales at our and our franchisees’ existing restaurants • the number of visitors to retail, lifestyle or entertainment centers where our restaurants are located may decline • lower than expected same-restaurant sales growth or same-restaurant traffic growth • unsuccessful marketing programs or limited-time menu offerings • shortages or disruptions in the supply or delivery of frequently used food items or increases in the cost of our frequently used food items • unsuccessful new restaurant openings • our inability to compete successfully with other breakfast and lunch restaurants • our vulnerability to food safety and food-borne illness concerns • issues with our existing franchisees, including their financial performance, our lack of control over their operations and conflicting business interests • our reliance on a small number of suppliers for a substantial amount of our food and coffee • geographic concentration • damage to our reputation and negative publicity, even if unwarranted • our inability to effectively manage the accelerated impact of social media and artificial intelligence Risks Related to Information Technology and Intellectual Property • our failure to adequately protect our network security • compliance with, and expansion of, federal and state laws and regulations relating to privacy, data protection, advertising and consumer protection • potential state property law liability with our gift cards • our failure to enforce and maintain our trademarks and other intellectual property • adverse litigation outcomes with respect to our intellectual property rights Risks Related to Employees and the Workforce • our inability to identify qualified individuals for our workforce • our failure to maintain our corporate culture • potential unionization activities • risks associated with our sustainability activities Legal and Regulatory Risks • compliance with federal and local environmental, labor, employment, food safety, franchise, zoning and other applicable laws and regulations • the distraction and expense of litigation • labor shortages and increased labor and healthcare costs • risks associated with leasing properties subject to long-term and non-cancelable leases • the impact of changes to future tax laws, unanticipated tax liabilities and realization of our deferred tax assets • risks related to our sale of alcoholic beverages Risks Related to Accounting and Financial Reporting Matters • impairment in the carrying value of our goodwill or indefinite-lived intangible assets • risks associated with changes to accounting estimates • our inability to effectively manage our internal control over financial reporting • changes in accounting principles or estimates 13 Table of Contents Risks Related to Our Indebtedness • our level of indebtedness • our duty to comply with covenants under our Credit Agreement • volatility in credit and capital markets Risks Related to Our Company and Organizational Structure • our reliance on our operating subsidiaries • risks associated with the anti-takeover provisions of Delaware law, our amended and restated certificate of incorporation (as amended to date, “our amended and restated certificate of incorporation”) and bylaws • risks associated with exclusive forum jurisdiction in the Court of Chancery in the State of Delaware Risks Related to Ownership of Our Common Stock • the market price of our common stock could be reduced by future offerings of debt or equity securities • our expectation not to pay any dividends on our common stock in the foreseeable future • possible significant fluctuations in our quarterly results of operations that could fall below the expectations of securities analysts and investors • dilutive impact from grants under our equity incentive plans General Risk Factors • the loss of our executive officers or other key employees • lack of access to additional capital to support business growth Risks Related to Our Business and Industry We are vulnerable to changes in economic conditions and consumer preferences that could have a material adverse effect on our business, financial condition and results of operations.
If any of the risks and uncertainties described in the cautionary factors described below actually occur or continue to occur, our business, financial condition, results of opera tions, cash flow and the trading price of our common stock could be materially and adversely affected.
If any of the risks and uncertainties described in the cautionary factors below actually occur or continue to occur, our business, financial condition, results of opera tions and cash flow and the trading price of our common stock could be materially and adversely affected.
Moreover, the risks below are not the only risks we face and additional risks not currently known to us or that we presently deem immaterial may emerge or become material at any time and may adversely impact our business, reputation, financial condition, results of operati ons, cash flow or the trading price of our common stock.
Moreover, the risks below are not the only risks we face and additional risks not currently known to us or that we presently deem immaterial may emerge or become material at any time and may adversely impact our business, reputation, financial condition, results of operati ons or cash flow or the trading price of our common stock.
Existing restaurants could also make it more difficult to build our and our franchisees’ consumer base for a new restaurant in the same market.
Our existing restaurants could also make it more difficult to build our and our franchisees’ consumer base for a new restaurant in the same market.
A decline in traffic at these locations for a sustained period could have a material adverse effect on our business, financial condition and results of operations. Our same-restaurant sales growth may be lower than we expect in future periods.
A decline in traffic at these locations for a sustained period could have a material adverse effect on our business, financial condition and results of operations. Our same-restaurant sales growth and same-restaurant traffic growth may be lower than we expect in future periods.
Our continued success also depends in part on the continued popularity of our menu and the experience we offer customers at our restaurants. Consumer tastes, nutritional and dietary trends, traffic patterns and the type, number, and location of competing restaurants often affect the restaurant business, and our competitors may react more efficiently and effectively to changes in those conditions.
Our continued success also depends in part on the popularity of our menu and the experience we offer customers at our restaurants. Consumer tastes, nutritional and dietary trends, traffic patterns and the type, number, and location of competing restaurants often affect the restaurant business, and our competitors may react more efficiently and effectively to changes in those conditions.
If our rights in our intellectual property were invalidated or deemed unenforceable, we may not be able to prevent third parties from using such intellectual property or similar intellectual property to compete with us, which, in turn, could lead to a decline in our brand and the goodwill associated therewith and the results of operations.
If our rights in our intellectual property were invalidated or deemed unenforceable, we may not be able to prevent third parties from using such intellectual property or similar intellectual property to compete with us, which, in turn, could lead to a decline in our brand and the goodwill associated therewith and our results of operations.
These laws include employee classifications as exempt or non-exempt, minimum wage requirements, employment eligibility verification requirements, workers’ compensation rates, overtime, family leave, working conditions, safety standards, immigration status, unemployment tax rates, state and local payroll taxes, federal and state laws which prohibit discrimination, citizenship requirements and other wage and benefit requirements for employees classified as non-exempt.
These laws include employee classifications as exempt or non-exempt, minimum wage requirements, employment eligibility verification requirements, workers’ compensation rates, overtime, family leave, working conditions, safety standards, immigration status, unemployment tax rates, state and local payroll taxes, and federal and state laws which prohibit discrimination, citizenship requirements and other wage and benefit requirements for employees classified as non-exempt.
In addition, certain laws, including the Americans with Disabilities Act, which, among other things, requires our restaurants to meet federally mandated requirements for the disabled, could require us to expend significant funds to make modifications 28 Table of Contents to our restaurants if we failed to comply with applicable standards.
In addition, certain laws, including the Americans with Disabilities Act, which, among other things, requires our restaurants to meet federally mandated requirements for the disabled, could require us to expend significant funds to make modifications to our 28 Table of Contents restaurants if we failed to comply with applicable standards.
To comply with the rules and regulations of the SEC, we need to continue to dedicate internal resources, engage outside consultants and continue to execute on a detailed work plan to assess and document the adequacy of our internal control over financial reporting, continue taking steps to improve control processes, as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting.
To comply with the rules and regulations of the SEC, we need to continue to dedicate internal resources, engage outside consultants and execute on a detailed work plan to assess and document the adequacy of our internal control over financial reporting, continue taking steps to improve control processes, as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting.
Our business is subject to the risk of litigation by employees or others through private actions, class actions, administrative proceedings, regulatory actions or other litigation. Moreover, employment and labor claims asserted against franchisees may at times be made against us as a franchisor. The outcome of litigation, particularly class action and regulatory actions, is difficult to assess or quantify.
Our business is subject to the risk of litigation by employees or others through private actions, class actions, administrative proceedings, regulatory actions or other litigation. Moreover, employment and labor claims asserted against franchisees may at times be made against us as a franchisor. The outcome of litigation, particularly class action lawsuits and regulatory actions, is difficult to assess or quantify.
If any of our workers are found to be unauthorized, we could experience adverse publicity that may adversely impact our brand, disrupt our operations, make it more difficult to hire and keep qualified employees, cause temporary increases in our labor costs as we train new employees and result in adverse publicity.
If any of our workers are found to be unauthorized, we could experience adverse publicity that may adversely impact our brand, disrupt our operations, make it more difficult to hire and keep qualified employees, and cause temporary increases in our labor costs as we train new employees.
We and our franchisees rely heavily on our computer systems and network infrastructure across our operations, including point-of-sale processing at our restaurants, for management of our supply chain, accounting, payment of obligations, collection of cash, credit and debit card transactions and other processes and procedures.
We and our franchisees rely heavily on computer systems and network infrastructure across our operations, including point-of-sale processing at the restaurants and for management of our supply chain, accounting, payment of obligations, collection of cash, credit and debit card transactions and other processes and procedures.
Increases in the tip credit minimum wage in these states or localities, or under federal law, may have a material adverse effect on our labor costs, and our financial performance. Increases in federal or state minimum wage may also result in increases in the wage rates paid for non-minimum wage positions.
Increases in the tip credit minimum wage in these states or localities, or under federal law, may have a material adverse effect on our labor costs, and our financial performance. Increases in federal or state minimum wages may also result in increases in the wage rates paid for non-minimum wage positions.
In the future, we may attempt to obtain financing or to further increase our capital resources by issuing additional shares of our common stock or by offering debt or other equity securities, including senior or subordinated notes, debt securities convertible into equity or shares of preferred stock.
In the future, we may attempt to obtain financing or to further increase our capital resources by issuing additional shares of our common stock or by offering debt or other equity securities, including senior or subordinated notes and debt securities convertible into equity or shares of preferred stock.
Our ability to operate new restaurants profitably and increase our average unit volume and same-restaurant sales growth will depend on many factors, some of which are beyond our control, including: • consumer awareness and understanding of our brand; • general economic conditions, which can affect restaurant traffic, local labor costs and prices we pay for the food products and other supplies we use; • consumption patterns and food preferences that may differ from region to region; • changes in consumer preferences and discretionary spending; • difficulties obtaining or maintaining adequate relationships with distributors or suppliers in new markets; 16 Table of Contents • increases in prices for commodities; • inefficiency in our labor costs as the staff gains experience; • competition, either from our competitors in the restaurant industry or our own restaurants; • temporary and permanent site characteristics of new restaurants; • changes in government regulation; and • other unanticipated increases in costs, any of which could give rise to delays or cost overruns.
Our ability to operate new restaurants profitably and increase our average unit volume and same-restaurant sales growth will depend on many factors, some of which are beyond our control, including: • consumer awareness and understanding of our brand; • general economic conditions, which can affect restaurant traffic, local labor costs and prices we pay for the food products and other supplies we use; • consumption patterns and food preferences that may differ from region to region; • changes in consumer preferences and discretionary spending; • difficulties obtaining or maintaining adequate relationships with distributors or suppliers in new markets; • increases in prices for commodities; • inefficiency in our labor costs as the staff gains experience; • competition, either from our competitors in the restaurant industry or our own restaurants; • temporary and permanent site characteristics of new restaurants; • changes in government regulation; and • other unanticipated increases in costs, any of which could give rise to delays or cost overruns.
Further, the standards for systems currently used for transmission and approval of electronic payment transactions, and the technology utilized in electronic payment themselves, all of which can put electronic payment data at risk, are determined and controlled by the payment card industry, not by us.
Further, the standards for systems currently used for transmission and approval of electronic payment transactions, and the technology utilized in electronic payments themselves, all of which can put electronic payment data at risk, are determined and controlled by the payment card industry, not by us.
If we or our franchisees face labor shortages or increased labor costs because of increased competition for employees, higher employee-turnover rates, unionization of restaurant workers, or increases in the federally-mandated or state-mandated minimum wage, change in exempt and non-exempt status, unemployment tax rates, workers’ compensation rates, overtime, family leave, safety standards, payroll taxes, citizenship requirements or other employee benefits costs (including costs associated with health insurance coverage or workers’ compensation insurance), our operating expenses could increase and our growth could be adversely affected.
If we or our franchisees face labor shortages or increased labor costs because of increased competition for employees, higher employee-turnover rates, unionization of restaurant workers, or increases in the federally-mandated or state-mandated minimum wage, changes in exempt and non-exempt status, unemployment tax rates, workers’ compensation rates, overtime, family leave, safety standards, payroll taxes, citizenship requirements or other employee benefits costs (including costs associated with health insurance coverage or workers’ compensation insurance), our operating expenses could increase and our growth could be adversely affected.
Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders and designates the federal district courts of the United States of America as the sole and exclusive forum for claims arising under the Securities Act of 1933, as amended, which, in each case, could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees, agents or other stockholders.
Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders and designates the federal district courts of the United States of America as the sole and exclusive forum for claims arising under the Securities Act of 1933, as amended (the “Securities Act”), which, in each case, could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees, agents or other stockholders.
Because these cases often seek punitive damages, which may not be covered by insurance, such litigation could have a material effect on our business, financial condition and results of operations.
Because these cases often seek punitive damages, which may not be covered by insurance, such litigation could have a material adverse effect on our business, financial condition and results of operations.
In addition, provisions of our amended and restated certificate of incorporation and bylaws may make it more difficult to, or prevent a third party from, acquiring control of us without the approval of our Board.
In addition, provisions of our amended and restated certificate of incorporation and bylaws may make it more difficult to, or prevent a third party from, acquiring control of us without the approval of our Board of Directors.
A judgment or other liability in excess of our insurance coverage for any claims or any adverse publicity resulting from claims could have a material adverse effect on our business, financial condition and results of operations.
A judgment or other liability in excess of our insurance coverage for any claims or any adverse publicity resulting from any such claims could have a material adverse effect on our business, financial condition and results of operations.
Among other things, these provisions: • provide for a classified Board with staggered three-year terms; • do not permit cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates; • delegate the sole power of a majority of the Board to fix the number of directors; • provide the power of our Board to fill any vacancy on our Board, whether such vacancy occurs as a result of an increase in the number of directors or otherwise; • authorize the issuance of “blank check” preferred stock without any need for action by stockholders; • eliminate the ability of stockholders to call special meetings of stockholders; and 31 Table of Contents • establish advance notice requirements for nominations for election to our Board or for proposing matters that can be acted on by stockholders at stockholder meetings.
Among other things, these provisions: • provide for a classified Board with staggered three-year terms; • do not permit cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates; • delegate the sole power of a majority of the Board to fix the number of directors; • provide the power of our Board to fill any vacancy on our Board, whether such vacancy occurs as a result of an increase in the number of directors or otherwise; • authorize the issuance of “blank check” preferred stock without any need for action by stockholders; • eliminate the ability of stockholders to call special meetings of stockholders; and • establish advance notice requirements for nominations for election to our Board or for proposing matters that can be acted on by stockholders at stockholder meetings.
As a result of our concentration in this market, we have been, and in the future may be, disproportionately affected by conditions in this geographic area compared to other chain restaurants with a national footprint. Damage to our reputation and negative publicity could have a material adverse effect on our business, financial condition and results of operations.
As a result of this concentration, we have been, and in the future may be, disproportionately affected by conditions in this geographic area compared to other chain restaurants with a more national footprint. Damage to our reputation and negative publicity could have a material adverse effect on our business, financial condition and results of operations.
As a result, if we open new restaurants in or near markets in which we or our franchisees’ already have restaurants, it could have a material adverse effect on the results of operations and same-restaurant sales growth for our restaurants in such markets due to the close proximity with our other restaurants and market saturation.
As a result, if we open new restaurants in or near markets in which we or our franchisees already have restaurants, it could have a material adverse effect on the results of operations and same-restaurant sales growth for our restaurants in such markets due to the close proximity with our other restaurants and market saturation.
As a result, we need to continuously innovate and develop our marketing strategies in order to maintain broad appeal with customers and brand relevance, particularly given the rise in digital orders by customers at home due to the increased work-from-home customer base.
As a result, we must continuously innovate and develop our marketing strategies in order to maintain broad appeal with customers and brand relevance, particularly given the rise in digital orders by customers at home due to the increased work-from-home customer base.
If our ESG practices or disclosures do not meet stakeholders’ evolving expectations and standards, our customer and employee retention, our access to certain types of capital, and our brand and reputation may be adversely impacted, which could affect our business operations and financial condition.
If our sustainability practices or disclosures do not meet stakeholders’ evolving expectations and standards, our customer and employee retention, our access to certain types of capital, and our brand and reputation may be adversely impacted, which could affect our business operations and financial condition.
Sales cannibalization between our restaurants may become significant in the future as we continue to open new restaurants and could affect our sales growth, which could, in turn, have a material adverse effect on our business, financial condition and results of operations.
Sales transfer between our restaurants may become significant in the future as we continue to open new restaurants and could affect our sales growth, which could, in turn, have a material adverse effect on our business, financial condition and results of operations.
Any failure to comply with these rules and/or requirements could significantly harm our brand, reputation, business and results of operations, and in the case of PCI-DSS, could result in monetary penalties and/or the exclusion from applicable card brands. We also rely on independent service providers for payment processing, including payments made using credit and debit cards.
Any failure to comply with these rules and/or requirements could significantly harm our brand, reputation, business and results of operations, and in the case of PCI-DSS, could result in monetary penalties and/or the exclusion from applicable card 22 Table of Contents brands. We also rely on independent service providers for payment processing, including payments made using credit and debit cards.
Any publicity relating to health concerns, perceived or specific outbreaks of infectious diseases attributed to one or more of our restaurants, or non-compliance with government restrictions imposed by federal, state and local governments could result in a significant decrease in customer traffic in all of our restaurants and could have a material adverse effect on our business, financial condition and results of operations.
Any publicity relating to health concerns, perceived or specific outbreaks of infectious diseases attributed to one or more of our restaurants, or non-compliance with government restrictions imposed by federal, state and local governments could result in a significant decrease in customer 20 Table of Contents traffic in all of our restaurants and could have a material adverse effect on our business, financial condition and results of operations.
If our efforts to protect our intellectual property are not adequate, or if any 23 Table of Contents third-party misappropriates or infringes on our intellectual property, whether in print, on the Internet or through other media, the value of our brands may be adversely affected, which could have a material adverse effect on our business, including the failure of our brands and branded products to achieve and maintain market acceptance.
If our efforts to protect our intellectual property are not adequate, or if any third party misappropriates or infringes on our intellectual property, whether in print, on the Internet or through other media, the value of our brands may be adversely affected, which could have a material adverse effect on our business, including the failure of our brands and branded products to achieve and maintain market acceptance.
Any common stock issued in connection with the 2021 Equity Plan or the 2017 Equity Plan would dilute the ownership percentage held by existing stockholders. General Risk Factors We depend on our executive officers and certain other key employees, the loss of whom could have a material adverse effect on our business, financial condition and results of operations.
Any common stock issued in connection with the 2021 Equity Plan or the 2017 Equity Plan would dilute the ownership percentage held by existing stockholders. 32 Table of Contents General Risk Factors We depend on our executive officers and certain other key employees, the loss of whom could have a material adverse effect on our business, financial condition and results of operations.
We may not respond quickly enough to the changing demands that our expansion will impose on our management, restaurant teams and existing infrastructure which could have a material adverse effect on our business, financial condition and results of operations. Opening new restaurants in existing markets may adversely impact sales at our and our franchisees’ existing restaurants.
We may not respond quickly enough to the changing demands that our expansion will impose on our management, restaurant teams and existing infrastructure, which could have a material adverse effect on our business, financial condition and results of operations. 15 Table of Contents Opening new restaurants in existing markets may adversely impact sales at our and our franchisees’ existing restaurants.
We may also be contractually required to indemnify and hold harmless third parties from the costs or consequences of non-compliance with any laws, regulations or other legal obligations relating to 22 Table of Contents privacy or consumer protection or any inadvertent or unauthorized use or disclosure of data that we store or handle as part of operating our business.
We may also be contractually required to indemnify and hold harmless third parties from the costs or consequences of non-compliance with any laws, regulations or other legal obligations relating to privacy or consumer protection or any inadvertent or unauthorized use or disclosure of data that we store or handle as part of operating our business.
If any of our trade secrets or information were to be disclosed to or independently developed by a competitor, it could have a material adverse effect on our business, financial condition and results of operations.
If any of our trade secrets or other confidential information were to be disclosed to or independently developed by a competitor, it could have a material adverse effect on our business, financial condition and results of operations.
We performed a qualitative annual impairment assessment of goodwill and indefinite-lived intangible assets on the first day of the fourth quarter of 2024. Based on the results of the qualitative assessment, we did not perform a quantitative assessment and no impairment was recognized in 2024.
We performed a qualitative annual impairment assessment of goodwill and indefinite-lived intangible assets on the first day of the fourth quarter of 2025. Based on the results of the qualitative assessment, we did not perform a quantitative assessment and no impairment was recognized in 2025.
The failure to comply with the covenants under our Credit Agreement or the volatile credit and capital markets could have a material adverse effect on our financial condition. Our ability to manage our debt is dependent on our level of positive cash flow from company-owned and franchise-owned restaurants. An economic downturn may adversely impact our cash flows.
The failure to comply with the covenants under our Credit Agreement or volatility in the credit and capital markets could have a material adverse effect on our financial condition. Our ability to manage our debt is dependent on our level of positive cash flow from company-owned and franchise-owned restaurants. An economic downturn may adversely impact our cash flows.
Any actual or perceived breach in the security of our information technology systems or those of our franchisees and third-party service providers could lead to damage or failure of our computer systems or network infrastructure that causes an interruption in our operations could have a material adverse effect on our business and a significant theft, loss, disclosure, modification or misappropriation of, or access to, guests’, employees’, third parties’ or other proprietary data or other breach of our information technology systems could subject us or our franchisees to litigation or to actions by regulatory authorities.
Any actual or perceived breach in the security of our information technology systems or those of our franchisees and third-party service providers could lead to damage or failure of our computer systems or network infrastructure, causing an interruption in our operations, or could lead to a significant theft, loss, disclosure, modification or misappropriation of, or access to, guests’, employees’, third parties’ or other proprietary data or other breach of our information technology systems, any of which could have a material adverse effect on our business or subject us or our franchisees to litigation or to actions by regulatory authorities.
We could also incur additional costs and require additional resources to monitor, report and comply with various ESG practices, laws and regulations, which could increase our operating costs and affect our results of operations and financial condition. In addition, from time to time, we may communicate certain initiatives regarding climate change, animal welfare and other ESG matters.
We could also incur additional costs and require additional resources to monitor, report and comply with various sustainability practices, laws and regulations, which could increase our operating costs and affect our results of operations and financial condition. In addition, from time to time, we may communicate certain initiatives regarding climate change, animal welfare and other corporate sustainability matters.
Certain customers, investors, lenders, regulators and other industry stakeholders have placed increasing importance on corporate ESG practices, which could cause us to incur additional costs and changes to our operations.
Certain customers, investors, lenders, regulators and other industry stakeholders have placed increasing importance on corporate sustainability practices, which could cause us to incur additional costs and changes to our operations.
Any failure to preserve our culture could adversely impact our operations, including our ability to retain and recruit personnel and to effectively focus 24 Table of Contents on and pursue our corporate objectives. If we cannot maintain our corporate culture as we grow, it could have a material adverse effect on our business, financial condition and results of operations.
Any failure to preserve our culture could adversely impact our operations, including our ability to retain and recruit personnel and to effectively focus on and pursue our corporate objectives. If we cannot maintain our corporate culture as we grow, it could have a material adverse effect on our business, financial condition and results of operations.
One or more instances of food-borne illness in one of our company-owned or franchised restaurants could adversely affect sales at all our restaurants if highly publicized, such as on national media outlets or through social media, especially due to the geographic concentration of many of our restaurants.
One or more instances of food-borne illness in one of our company-owned or franchised restaurants could adversely affect sales at all our restaurants if highly publicized, such as on national media outlets or through social media, especially 18 Table of Contents due to the geographic concentration of many of our restaurants.
Remote working, particularly for an extended period of time, could increase certain risks to our business, including an increased risk of cybersecurity events, vulnerability of our systems and improper dissemination of confidential or personal information, if our physical and cybersecurity measures or our corporate policies are not effective.
Remote working, particularly for an extended period of time, could increase certain risks to our business, including an increased risk of 21 Table of Contents cybersecurity events, vulnerability of our systems and improper dissemination of confidential or personal information, if our physical and cybersecurity measures or our corporate policies are not effective.
In addition, as leases expire for 26 Table of Contents restaurants that we will continue to operate, we may, at the end of the lease term and any renewal period for a restaurant, be unable to negotiate renewals, either on commercially acceptable terms or at all.
In addition, as leases expire for restaurants that we will continue to operate, we may, at the end of the lease term and any renewal period for a restaurant, be unable to negotiate renewals, either on commercially acceptable terms or at all.
Alcoholic beverage control regulations relate to numerous aspects of daily operations of our restaurants, including minimum age of patrons and employees, hours of operation, advertising, trade practices, wholesale purchasing, other relationships with alcoholic beverages manufacturers, wholesalers and distributors, inventory control and handling, storage and dispensing of alcoholic beverages.
Alcoholic beverage control regulations relate to numerous aspects of daily operations of our restaurants, including minimum age of patrons and employees, hours of 27 Table of Contents operation, advertising, trade practices, wholesale purchasing, other relationships with alcoholic beverages manufacturers, wholesalers and distributors, inventory control and handling, and storage and dispensing of alcoholic beverages.
Same-restaurant sales growth will continue to be a critical factor affecting our ability to generate profits because the profit margin on same-restaurant sales growth is generally higher than the profit margin on new restaurant sales. Our ability to increase same-restaurant sales growth depends in part on our ability to successfully implement our initiatives to build sales.
Same-restaurant sales growth will continue to be a critical factor affecting our ability to generate profits because the profit margin on same-restaurant sales growth is generally higher than the profit margin on new restaurant sales. Our ability to increase same-restaurant sales growth depends in part on our ability to successfully implement our marketing and operations initiatives to build sales.
If these initiatives are not successful, we could incur expenses without the benefit of higher revenues, which could have a material adverse effect on our business, financial condition and results of operations. Changes in the cost of food could have a material adverse effect on our business, financial condition and results of operations.
If these initiatives are not successful, we could incur expenses without the benefit of higher revenues, which could have a material adverse effect on our business, financial condition and results of operations. 16 Table of Contents Changes in the cost of food could have a material adverse effect on our business, financial condition and results of operations.
If that were to occur, we may not be able to find replacement suppliers on commercially reasonable terms or a timely basis, if at all. More generally, we are subject to additional risks related to the increases to energy or transportation costs.
If that were to occur, we may not be able to find replacement suppliers on commercially reasonable terms or a timely basis, if at all. More generally, we are subject to additional risks related to increases in energy and transportation costs.
These potential public health issues, in addition to food tampering, could adversely affect food prices and availability of certain food products, generate negative publicity, and lead to closure of restaurants resulting in a decline in 17 Table of Contents our sales or profitability.
These potential public health issues, in addition to food tampering, could adversely affect food prices and availability of certain food products, generate negative publicity, and lead to closure of restaurants resulting in a decline in our sales or profitability.
Although we maintain what we believe to be adequate levels of insurance, insurance may not be 25 Table of Contents available at all or in sufficient amounts to cover any liabilities with respect to these or other matters.
Although we maintain what we believe to be adequate levels of insurance, insurance may not be available at all or in sufficient amounts to cover any liabilities with respect to these or other matters.
Restaurant traffic and our resulting sales depend in part on our ability to anticipate, identify and respond to changing consumer preferences and economic conditions. The rising popularity of certain weight loss drugs, which suppress a person’s appetite, may impact sales or traffic in our restaurants.
Restaurant traffic and our resulting sales depend in part on our ability to anticipate, identify and respond to changing consumer preferences and economic conditions. For example, the widespread popularity of certain weight loss drugs, which suppress a person’s appetite, may impact sales or traffic in our restaurants.
Any future 27 Table of Contents failure to comply with these regulations and obtain or retain licenses could have a material adverse effect on our business, financial condition and results of operations.
Any future failure to comply with these regulations and obtain or retain licenses could have a material adverse effect on our business, financial condition and results of operations.
Food service businesses depend on consumer discretionary spending and are often affected by changes in consumer tastes, national, regional and local economic conditions and demographic trends. Factors such as traffic patterns, weather, fuel prices, local demographics and the type, number and locations of competing restaurants may adversely affect the performances of individual locations.
Food service businesses depend on consumer discretionary spending and are often affected by changes in consumer tastes, national, regional and local economic conditions and demographic trends. Factors such as traffic patterns, weather, fuel prices, local demographics and the type, number and locations of competing restaurants have adversely affected, and may continue to adversely affect the performance of individual locations.
Changes in the price or availability of certain food products could affect our profitability and reputation. While some commodities we purchase are subject to contract pricing, as our contracts expire, we may not be able to successfully re-negotiate terms that protect us from price inflation in the future. International commodities we purchase are also subject to supply shortages or interruptions.
Changes in the price or availability of certain food products could affect our profitability and reputation. While some commodities we purchase are subject to contract pricing, as our contracts expire, we may not be able to successfully re-negotiate terms that protect us from price inflation in the future.
Our and our franchisees’ operations depend upon our and our franchisees’ ability to protect our computer equipment and systems against damage from physical theft, fire, power loss, telecommunications failure or other catastrophic events, as well as from internal and external security breaches, viruses and other disruptive problems.
Our operations and those of our franchisees depend upon the ability to protect computer equipment and systems against damage from physical theft, fire, power loss, telecommunications failure or other catastrophic events, as well as from internal and external security breaches, viruses and other disruptive problems.
If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly limited, which could have a material adverse effect on our business, financial condition and results of operations.
If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly limited, which could have a material adverse effect on our business, financial condition and results of operations. Item 1B. Unresolved Staff Comments None
Any such litigation could result in substantial costs and diversion of resources and could have a material adverse effect on our business, financial condition and results of operations regardless of whether we are able to successfully enforce our rights.
Any such litigation could result in substantial costs and diversion of management’s attention and resources and could have a material 24 Table of Contents adverse effect on our business, financial condition and results of operations regardless of whether we are able to successfully enforce our rights.
The consumer target area of our and our franchisees’ restaurants varies by location, depending on a number of factors, including population density, other local retail and business attractions, area demographics and geography.
The consumer target area of our company-owned restaurants and our franchise-owned restaurants varies by location, depending on a number of factors, including population density, other local retail and business attractions, area demographics and geography.
The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that a court could find these types of provisions to be inapplicable or unenforceable.
The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that a court could find our forum selection provision to be inapplicable or unenforceable.
We provide training and support to franchisees, and set and monitor operational standards and guidelines, however, because we do not have day-to-day control over the franchisees, our franchisees may operate restaurants in a manner that is not consistent with our standards, guidelines and requirements, or hire and train qualified managers and other restaurant personnel.
We provide training and support to franchisees and set and monitor operational standards and guidelines. However, because we do not have day-to-day control over the franchisees, our franchisees may operate restaurants, including hiring and training managers and other restaurant personnel, in a manner that is not consistent with our standards, guidelines and requirements.
Thereunder, the occurrence of a change of control transaction could constitute an event of default permitting acceleration of the indebtedness, thereby impeding our ability to enter into certain transactions.
Under our Credit Agreement, the occurrence of a change of control transaction could constitute an event of default permitting acceleration of the indebtedness, thereby impeding our ability to enter into certain transactions.
Any failure on our part to recognize or respond to these challenges may adversely affect the 14 Table of Contents success of any new restaurants and could have a material adverse effect on our business, financial condition and results of operations. Our failure to manage our growth effectively could harm our business and results of operations.
Any failure on our part to recognize or respond to these challenges may adversely affect the success of any new restaurants and could have a material adverse effect on our business, financial condition and results of operations. Our failure to manage our growth effectively could harm our business and results of operations. Our growth plan includes opening new restaurants.
As of December 29, 2024, we purchased substantially all of our pork from two suppliers, substantially all of our eggs from one supplier and all of our coffee from one supplier. We purchase these ingredients pursuant to purchase orders at prevailing market or negotiated contract prices and are not limited by minimum purchase requirements.
As of December 28, 2025, we procured substantially all of our pork from two suppliers, substantially all of our eggs from one supplier and all of our coffee from one supplier. We purchase these ingredients pursuant to purchase orders at prevailing market or negotiated contract prices and are not limited by minimum purchase requirements.
If our remediation of the material weaknesses is not effective, or if we otherwise fail to maintain effective internal control over financial reporting in the future, we may not be able to accurately or timely report our financial condition or results of operations, which, in turn, could adversely impact the market value of our common stock.
If we fail to maintain effective internal control over financial reporting, we may not be able to accurately or timely report our financial condition or results of operations, which, in turn, could adversely impact the market value of our common stock.
We do not expect to declare or pay any cash or other dividends in the foreseeable future on our common stock because we intend to use cash flow generated by operations to grow our business. Our credit agreement for our debt facilities restricts our ability to pay cash dividends on our common stock.
We do not expect to declare or pay any cash or other dividends on our common stock in the foreseeable future because we intend to invest cash generated by operations in the growth of our business. Our Credit Agreement for our debt facilities restricts our ability to pay cash dividends on our common stock.
In 2024 and continuing into 2025, for example, we have experienced significant increases in the cost of eggs, primarily due to an outbreak of avian influenza, as well as coffee and avocados, primarily due to the impact of climate and weather conditions.
In 2025, for example, we experienced significant increases in the cost of eggs, primarily due to an outbreak of avian influenza, as well as coffee, primarily due to the impact of climate and weather conditions.
The foregoing factors, as well as the significant common stock ownership by Advent could impede a merger, takeover, or other business combination, or discourage a potential investor from making a tender offer for our common stock, which, under certain circumstances, could reduce the market value of our common stock.
The foregoing factors could impede a merger, takeover, or other business combination, or discourage a potential investor from making a tender offer for our common stock, which, under certain circumstances, could reduce the market value of our common stock.
If we fail to comply with existing or future laws and regulations, we may be subject to governmental or judicial fines or sanctions.
If we fail to comply with existing or future laws and regulations, we may be 14 Table of Contents subject to governmental or judicial fines or sanctions.
Our growth plan includes opening new restaurants. Our existing restaurant management systems, financial and management controls and information systems may be inadequate to support our planned expansion. Managing our growth effectively will require us to continue to enhance these systems, procedures and controls and to recruit, hire, train and retain managers and team members.
Our existing restaurant management systems, financial and management controls and information systems may be inadequate to support our planned expansion. Managing our growth effectively will require us to continue our enhancement of these systems, procedures and controls and to recruit, hire, train and retain managers and team members.
For example, we are subject to industry requirements such as the Payment Card Industry Data Security Standard, or PCI-DSS, as well as certain other industry standards.
For example, we are subject to industry requirements such as the Payment Card Industry Data Security Standard (“PCI-DSS”), as well as certain other industry standards.
As of December 29, 2024, we had $398.6 million of goodwill and $139.2 million of indefinite-lived intangible assets. We test goodwill and indefinite-lived intangible assets for impairment annually on the first day of the fourth quarter of each fiscal year and whenever events or changes in circumstances indicate that impairment may have occurred.
As of December 28, 2025, we had $420.2 million of goodwill and $140.1 million of indefinite-lived intangible assets. We test goodwill and indefinite-lived intangible assets for impairment annually on the first day of the fourth quarter of each fiscal year and whenever events or changes in circumstances indicate that impairment may have occurred.
Any inability to recruit and retain qualified individuals may result in higher turnover and increased labor costs, and could compromise the quality of our service, could have a material adverse effect on our business, financial condition and results of operations. Any such inability could also delay the planned openings of new restaurants and could adversely impact our existing restaurants.
Any inability to recruit and retain qualified individuals may result in higher turnover and increased labor costs, and could compromise the quality of our service and have a material adverse effect on our business, financial condition and results of operations.
We face potential liability with our gift cards under the property laws of some states. Our gift cards, which may be used to purchase food and beverages in our restaurants, may be considered stored value cards by certain states in accordance with their abandoned and unclaimed property laws.
Our gift cards, which may be used to purchase food and beverages in our restaurants, may be considered stored value cards by certain states in accordance with their abandoned and unclaimed property laws.
The financial performance of our franchisees can have a material adverse effect on our business, financial condition and results of operations. As 15% and 19% of our system-wide restaurants were franchised as of December 29, 2024 and December 31, 2023, respectively, our results of operations are dependent in part upon the operational and financial success of our franchisees.
The financial performance of our franchisees can have a material adverse effect on our business, financial condition and results of operations. As 12% of our system-wide restaurants were franchised as of December 28, 2025, our results of operations are dependent in part upon the operational and financial success of our franchisees.
The regulation of the use of these cookies and other current online tracking and advertising practices or a loss in our ability to make effective use of services that employ such technologies could increase our costs of operations and limit our ability to acquire new customers on cost-effective terms and, consequently, have a material adverse effect on our business, financial condition and results of operations.
The regulation of the use of these cookies and other current online tracking and advertising practices or a loss in our ability to make effective use of services that employ such technologies could increase our costs of operations and limit our ability to acquire new customers on cost-effective terms and, consequently, have a material adverse effect on our business, financial condition and results of operations. 23 Table of Contents We face potential liability with our gift cards under the property laws of some states.
Our franchisees pay us fees pursuant to our franchise agreements. The viability of our franchise business depends on our ability to maintain good relationships with our franchisees.
The viability of our franchise business depends on our ability to maintain good relationships with our franchisees.
In the future, results of operations may fall below the expectations of securities analysts and investors. In that event, the price of our common stock could be adversely impacted. The market price of our common stock could be adversely affected by sales of substantial amounts of our common stock in the public markets.
In the future, results of operations may fall below the expectations of securities analysts and investors. In that event, the price of our common stock could be adversely impacted.
To the extent we have such disputes, the attention, time and financial resources of our management and our franchisees will be diverted from our restaurants, which could, even if we prevail, have a material adverse effect on our business, financial condition and results of operations.
To the extent we have such disputes, the attention, time and financial resources of our management and our franchisees will be diverted from our restaurants, which could, even if we prevail, have a material adverse effect on our business, financial condition and results of operations. 19 Table of Contents We have a limited number of suppliers and distributors for several of our frequently used ingredients.
If a court were to find the choice of forum provisions in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could have a material adverse effect on our business, financial condition and results of operations.
If a court were to find the choice of forum provisions in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could have a material adverse effect on our business, financial condition and results of operations. 31 Table of Contents Risks Related to Ownership of Our Common Stock Future offerings of debt or equity securities by us may have a material adverse effect on the market price of our common stock.
We may not be able to effectively respond to changes in consumer health perceptions, comply with further nutrient content disclosure requirements or adapt our menu offerings to trends in eating habits, which could have a material adverse effect on our business, financial condition and results of operations. 13 Table of Contents Our financial condition and results of operations are subject to, and may be adversely affected by, a number of other factors, many of which are also largely outside of our control.
We may not be able to effectively respond to changes in consumer health perceptions, comply with further nutrient content disclosure requirements or adapt our menu offerings to trends in eating habits, which could have a material adverse effect on our business, financial condition and results of operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

8 edited+2 added−1 removed3 unchanged
Biggest changeAdditionally, we conduct ongoing internal and external vulnerability and penetration scans. Our internal security team is led by a manager with over 40 years of experience who reports directly to our Chief Information Officer.
Biggest changeWe have developed vendor scoring criteria to assess cybersecurity, incidence readiness and cyber insurance of our critical vendors and service providers. Additionally, we conduct ongoing internal and external vulnerability and penetration scans. Our internal security team is led by a manager with over 40 years of experience in information technology and cybersecurity, who reports directly to our Chief Information Officer.
“ Risk Factors - Risks Related to Information Technology and Intellectual Property—Information technology system failures or breaches of our network security could interrupt our operations and have a material adverse effect on our business, financial condition and results of operations .” Governance The Audit Committee of our Board is tasked with oversight of certain risk issues, including cybersecurity.
“ Risk Factors - Risks Related to Information Technology and Intellectual Property—Information technology system failures or breaches of our network security could interrupt our operations and have a material adverse effect on our business, financial condition and results of operations .” Governance The Audit Committee of our Board of Directors is tasked with oversight of certain risk issues, including cybersecurity.
Our program defines our governance and management oversight, and includes (i) continual training to enhance user vigilance and resistance to phishing attempts and cyber-attacks, (ii) evaluation of compliance with privacy and data security regulations and (iii) reporting obligations in the event of an incident.
Our program defines our governance and management oversight and includes (i) continual employee training to enhance user vigilance and resistance to phishing attempts and cyber-attacks, (ii) evaluation of compliance with privacy and data security regulations and (iii) reporting obligations in the event of an incident.
However, any actual or perceived breach in the security of our information technology systems or those of our franchisees or our critical vendors and service providers could lead to damage to or failure of our computer systems or network infrastructure which could cause an interruption in our operations and could have a material adverse effect on our business.
However, any actual or perceived breach in the security of our information technology systems or those of our franchisees or our critical vendors and service providers could lead to damage to or failure of our computer systems or network infrastructure which could cause an interruption in our operations, cause reputational harm, and could have a material adverse effect on our business.
The Audit Committee receives reports on cybersecurity at least twice annually from the Company’s Chief Information Officer, who has over 25 years of experience in the management of information technology systems and cybersecurity. These reports cover trends vulnerability management, cybersecurity posture, risk assessment findings, incident responses and updates on technology initiatives.
The Audit Committee receives reports on cybersecurity at least twice annually from the Company’s Chief Information Officer (our “CIO”), who has over 25 years of experience in the management of information technology systems and cybersecurity. These reports cover trends vulnerability management, cybersecurity posture, risk assessment findings, incident responses and updates on technology initiatives.
Item 1C. Cybersecurity Risk Management and Strategy We deploy a cybersecurity program modelled on Center for Internet Security (CIS) Critical Security Controls, commonly referred to as CIS Controls. We believe our program’s control focus provides immediate protection and scalability for our business.
Item 1C. Cybersecurity Risk Management and Strategy We deploy a cybersecurity program modeled on Center for Internet Security (CIS) Critical Security Controls, commonly referred to as CIS Controls. We believe our program’s control focus provides immediate protection and scalability for our business.
Furthermore, a significant theft, loss, disclosure, modification or misappropriation of, or access to, guests’, employees’, third parties’ or other proprietary data or other breach of our information technology systems could subject us or our franchisees to litigation or to actions by regulatory authorities. See also Item 1A.
Furthermore, a significant theft, loss, disclosure, modification or misappropriation of, or access to, guests’, employees’, third parties’ or other proprietary data or other breach of our 33 Table of Contents information technology systems could subject us or our franchisees to litigation or to actions by regulatory authorities. See also Item 1A.
The Audit Committee briefs the full Board of Directors on these matters as a part of its reports of its meetings. 35 Table of Contents
The Audit Committee briefs the full Board of Directors on these matters as a part of its reports of its meetings.
Removed
On an annual basis, we engage an external partner to conduct a comprehensive risk assessment of our cybersecurity program, identify gaps based on best practices and recommend improvements. We have also developed vendor scoring criteria to assess cybersecurity, incidence readiness and cyber insurance of our critical vendors and service providers.
Added
Were a cybersecurity incident to occur or were we to identify a vulnerability, our CIO and our internal security team are responsible for leading the initial risk assessment, including the engagement of external experts, if necessary, and our Audit Committee or full Board may also be consulted.
Added
If a breach of our control structure were to occur, our executive leadership team, Audit Committee and counsel would be briefed by the CIO and a determination would be made on whether such issue is material to warrant disclosure. 34 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of December 29, 2024, company-owned and franchise-owned restaurants by juris diction were: State Company-owned Franchise-owned Total Alabama 6 — 6 Arizona 35 — 35 Arkansas — 3 3 Colorado 19 — 19 Delaware 4 — 4 Florida 133 — 133 Georgia 23 — 23 Illinois 8 — 8 Indiana 7 1 8 Kansas 13 — 13 Kentucky 2 15 17 Louisiana — 1 1 Maryland 15 — 15 Michigan 11 — 11 Mississippi — 1 1 Missouri 18 7 25 Nebraska 7 — 7 New Jersey 7 — 7 North Carolina 24 12 36 Ohio 44 — 44 Oklahoma 2 — 2 Pennsylvania 19 — 19 South Carolina 5 5 10 Tennessee 15 9 24 Texas 45 23 68 Utah — 1 1 Virginia 22 4 26 West Virginia — 1 1 Wisconsin 5 — 5 TOTAL 489 83 572
Biggest changeAs of December 28, 2025, company-owned and franchise-owned restaurants by juris diction were: State Company-owned Franchise-owned Total Alabama 9 — 9 Arizona 35 — 35 Arkansas — 3 3 Colorado 19 — 19 Delaware 6 — 6 Florida 141 — 141 Georgia 25 — 25 Idaho — 2 2 Illinois 11 — 11 Indiana 8 1 9 Kansas 12 — 12 Kentucky 2 17 19 Louisiana — 1 1 Maryland 17 — 17 Massachusetts 1 — 1 Michigan 11 — 11 Mississippi — 1 1 Missouri 23 4 27 Nebraska 7 — 7 Nevada 2 — 2 New Jersey 10 — 10 North Carolina 36 2 38 Ohio 48 — 48 Oklahoma 2 — 2 Pennsylvania 21 — 21 South Carolina 13 — 13 Tennessee 17 10 27 Texas 48 24 72 Utah — 3 3 Virginia 30 4 34 West Virginia — 1 1 Wisconsin 6 — 6 TOTAL 560 73 633
Item 2. Properties We lease all our company-owned restaurant locations. As of December 29, 2024, we h ad 489 company-owned restaurants and 83 franchise-owned restaurants located in 29 states, including a large presence in Florida, Texas, Ohio, North Carolina and Arizona.
Item 2. Properties We lease all our company-owned restaurant locations and our corporate headquarters. As of December 28, 2025, we had 560 company-owned restaurants and 73 franchise-owned restaurants located in 32 states, including a large presence in Florida, Texas, Ohio, North Carolina and Arizona.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeA significant increase in the number of claims or an increase in amounts owing under successful claims could materially adversely affect our business, financial condition, results of operations and cash flows. Item 4. Mine Safety Disclosures None 36 Table of Contents Part II
Biggest changeA significant increase in the number of claims or an increase in amounts owing under successful claims could materially adversely affect our business, financial condition, results of operations and cash flows. 35 Table of Contents Item 4. Mine Safety Disclosures None Part II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 36 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 37 Item 6. Reserved 38 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 39 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 56 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 36 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 36 Item 6. Reserved 37 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 38 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 54 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOctober 1, 2021 December 26, 2021 December 25, 2022 December 31, 2023 December 29, 2024 First Watch Restaurant Group, Inc. $ 100.00 $ 72.16 $ 64.20 $ 90.80 $ 84.46 Nasdaq Composite Index $ 100.00 $ 107.62 $ 72.77 $ 104.97 $ 138.90 S&P Restaurants Index $ 100.00 $ 84.95 $ 67.46 $ 79.93 $ 95.74
Biggest changeOctober 1, 2021 December 26, 2021 December 25, 2022 December 31, 2023 December 29, 2024 December 28, 2025 First Watch Restaurant Group, Inc. $ 100.00 $ 72.16 $ 64.20 $ 90.80 $ 84.46 $ 71.85 Nasdaq Composite Index $ 100.00 $ 107.62 $ 72.77 $ 104.97 $ 138.90 $ 167.24 S&P Restaurants Index $ 100.00 $ 84.95 $ 67.46 $ 79.93 $ 95.74 $ 83.75
This graph is not “soliciting material,” is not deemed filed with the SEC and is not to be incorporated by reference in any of our filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
This graph is not “soliciting material,” is not deemed filed with the SEC and is not to be incorporated by reference in any of our filings under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Issuer Purchases of Equity Securities None 37 Table of Contents Cumulative Stock Performance Graph The following graph compares the cumulative annual stockholders return on our common stock from October 1, 2021, the date our common stock began trading on Nasdaq, through December 29, 2024 , to that of the total return index for the Nasdaq Composite Index and the S&P Restaurants Index assuming an investment of $100 on October 1, 2021.
Issuer Purchases of Equity Securities None 36 Table of Contents Cumulative Stock Performance Graph The following graph compares the cumulative annual stockholders return on our common stock from October 1, 2021, the date our common stock began trading on Nasdaq, through December 28, 2025, to that of the total return index for the Nasdaq Composite Index and the S&P Restaurants Index assuming an investment of $100 on October 1, 2021.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on Nasdaq under the symbol “FWRG.” Holders As of March 7, 2025, there were 25 stockholders of record of our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on Nasdaq under the symbol “FWRG.” Holders As of February 20, 2026, there were 3 stockholders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFISCAL YEAR (in thousands) 2024 2023 2022 Net income (loss) $ 18,925 $ 25,385 $ 6,907 Depreciation and amortization 57,715 41,223 34,230 Interest expense 12,640 8,063 5,232 Income taxes 9,101 10,690 5,684 EBITDA 98,381 85,361 52,053 Stock-based compensation (1) 8,525 7,604 10,374 Transaction expenses (income), net (2) 2,587 3,147 2,513 Strategic transition costs (3) 1,843 892 2,318 Impairments and loss on disposal of assets (4) 525 1,359 920 Delaware Voluntary Disclosure Agreement Program (5) 126 1,250 149 Recruiting and relocation costs (6) 888 465 681 Severance costs (7) 204 26 155 Insurance proceeds in connection with natural disasters, net (8) 329 (621) 115 Loss on extinguishment of debt 428 — — Adjusted EBITDA $ 113,836 $ 99,483 $ 69,278 Total revenues $ 1,015,910 $ 891,551 $ 730,162 Net income (loss) margin 1.9 % 2.8 % 0.9 % Adjusted EBITDA margin 11.2 % 11.2 % 9.5 % Additional information Deferred rent expense (income) (9) $ 1,318 $ 2,090 $ 2,418 _____________________________ (1) Represents non-cash, stock-based compensation expense which is recorded within General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income (Loss).
Biggest changeThis was partially offset by the increase in general and administrative expenses. 47 Table of Contents Non-GAAP Financial Measure 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, respectively, for the periods indicated: FISCAL YEAR (in thousands) 2025 2024 2023 Net income $ 19,432 $ 18,925 $ 25,385 Depreciation and amortization 75,011 57,715 41,223 Interest expense 16,699 12,640 8,063 Income taxes (7,299) 9,101 10,690 EBITDA 103,843 98,381 85,361 Stock-based compensation, net of amounts capitalized (1) 10,760 8,525 7,604 Transaction expenses, net (2) 2,533 2,587 3,147 Strategic transition costs (3) 3,279 1,843 892 Impairments and loss on disposal of assets (4) 448 525 1,359 Delaware Voluntary Disclosure Agreement Program (5) 55 126 1,250 Recruiting and relocation costs (6) — 888 465 Severance costs (7) — 204 26 Insurance proceeds in connection with natural disasters, net (8) — 329 (621) Loss on extinguishment of debt — 428 — Adjusted EBITDA $ 120,918 $ 113,836 $ 99,483 Total revenues $ 1,222,501 $ 1,015,910 $ 891,551 Net income margin 1.6 % 1.9 % 2.8 % Adjusted EBITDA margin 9.9 % 11.2 % 11.2 % Additional information Deferred rent expense (9) $ 309 $ 1,318 $ 2,090 _____________________________ (1) Represents non-cash, stock-based compensation expense, net of amounts capitalized, which is recorded within General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income.
We believe these metrics are useful to investors because Management uses these metrics to evaluate performance and assess the growth of our business as well as the effectiveness of our marketing and operational strategies. New Restaurant Openings (“NROs”): the number of new company-owned First Watch restaurants commencing operations during the period.
We believe these metrics are useful to investors because our Management uses these metrics to evaluate performance and assess the growth of our business as well as the effectiveness of our marketing and operational strategies. New Restaurant Openings (“NROs”): the number of new company-owned First Watch restaurants commencing operations during the period.
Assumptions used in determining our incremental borrowing rate include a market yield implied by our outstanding secured term loans interpolated for various maturities using our synthetic credit rating, which is determined using a regression analysis of rated publicly-traded comparable companies and their financial data.
Assumptions used in determining our incremental borrowing rate include a market yield implied by our outstanding secured term loans interpolated for various maturities using our synthetic credit rating, which is determined using a regression analysis of rated comparable publicly-traded companies and their financial data.
Any adjustments identified after the measurement period are recorded in the Consolidated Statements of Operations and Comprehensive Income (Loss). The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date and costs that we incur to complete the business combination, such as legal and other professional fees, are expensed as they are incurred.
Any adjustments identified after the measurement period are recorded in the Consolidated Statements of Operations and Comprehensive Income. The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date and costs that we incur to complete the business combination, such as legal and other professional fees, are expensed as they are incurred.
See “Key Performance Indicators” for additional information . (2) Reconciliations from Income from operations and Income from operations margin, the most comparable GAAP measures to Restaurant level operating profit and Restaurant level operating profit margin, are set forth in the schedules within the Non-GAAP Financial Measure Reconciliations section below.
See “Key Performance Indicators” for additional information . (2) Reconciliations from Income from operations and Income from operations margin, the most comparable GAAP measures to Restaurant level operating profit and Restaurant level operating profit margin, respectively, are set forth in the schedules within the Non-GAAP Financial Measure Reconciliations section below.
The costs include inventory spoilage and labor costs, which were recorded in Food and beverage costs and Labor and other related expenses, respectively, on the Consolidated Statements of Operations and Comprehensive Income (Loss). (4) Represents the non-cash portion of straight-line rent expense recorded within Occupancy expenses on the Consolidated Statements of Operations and Comprehensive Income (Loss).
The costs include inventory spoilage and labor costs, which were recorded in Food and beverage costs and Labor and other related expenses, respectively, on the Consolidated Statements of Operations and Comprehensive Income. (4) Represents the non-cash portion of straight-line rent expense recorded within Occupancy expenses on the Consolidated Statements of Operations and Comprehensive Income.
We believe that our cash flow from operations combined with our availability under the Credit Facility and our cash and cash equivalents will be sufficient to meet the Company’s liquidity needs for at least the next 12 months.
We believe that our cash flow from operations combined with our availability under the Credit Facility and our cash and cash equivalents will be sufficient to meet our liquidity needs for at least the next 12 months.
Key Performance Indicators Throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations” we commonly discuss the following key operating metrics that we believe will drive our financial results and long-term growth model.
Key Performance Indicators Throughout this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” we commonly discuss the following key operating metrics that we believe will drive our financial results and long-term growth model.
The Company does not have sufficient historical stock option exercise activity and therefore we estimated the expected term of stock options granted under the 2021 Equity Plan using the simplified method, which represents the mid-point between the vesting period and the contractual term for each grant.
The Company does not have sufficient historical stock option exercise activity and therefore the expected term of stock options granted under the 2021 Equity Plan is estimated using the simplified method, which represents the mid-point between the vesting period and the contractual term for each grant.
In performing the quantitative assessment for indefinite-lived intangibles, we estimate the fair value of trade names and trademarks using the relief-from-royalty method, which requires assumptions related to projected sales, assumed royalty rates that could be payable if we did not own the trademarks and a discount rate.
In performing the quantitative assessment for indefinite-lived intangibles, we estimate the fair value of trade names and trademarks using the relief-from-royalty method, which requires assumptions related to projected sales, assumed royalty 51 Table of Contents rates that could be payable if we did not own the trademarks and a discount rate.
We assess the impairment of the right-of-use asset at the asset group level whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Changes in Management’s judgments and in the assumptions being used may produce materially different amounts in the recognition of the right-of-use assets, lease liabilities and lease expense.
We assess the impairment of the right-of-use asset at the asset group level whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. 52 Table of Contents Changes in Management’s judgments and in the assumptions being used may produce materially different amounts in the recognition of the right-of-use assets, lease liabilities and lease expense.
The accounting policies and estimates that we believe to be the most critical to an understanding of our financial condition and results of operations and that require the most complex and subjective management judgments are discussed below. Business Combinations We account for acquisitions using the purchase method of accounting.
The 50 Table of Contents accounting policies and estimates that we believe to be the most critical to an understanding of our financial condition and results of operations and that require the most complex and subjective management judgments are discussed below. Business Combinations We account for acquisitions using the purchase method of accounting.
The estimates we make under this method include, among other items, depreciation and amortization expense allowable for tax purposes, credits for items such as taxes paid on reported employee tip wages, effective rates for state and local income taxes and the deductibility of certain items.
The estimates made under this method include, among other items, depreciation and amortization expense allowable for tax purposes, credits for items such as taxes paid on reported employee tip wages, effective tax rates for state and local income taxes and the deductibility of certain items.
We record liabilities for unresolved and incurred but not reported claims at the anticipated cost below applicable retention levels or per-claim deductible amounts. Insurance reserve liabilities are established using actuarial assumptions and judgments regarding the frequency and severity of claims.
Liabilities for unresolved and incurred but not reported claims are recognized at the anticipated cost below applicable retention levels or per-claim deductible amounts. Insurance reserve liabilities are established using actuarial assumptions and judgments regarding the frequency and severity of claims.
Recently Issued Accounting Pronouncements For a discussion of recently issued accounting pronouncements, see Note 2, Summary of Significant Accounting Policies , in the accompanying notes to the consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K. 55 Table of Contents
Recently Issued Accounting Pronouncements For a discussion of recently issued accounting pronouncements, see Note 2, Summary of Significant Accounting Policies , in the accompanying notes to the consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K.
During 2024 and 2023, we elected to perform a qualitative assessment for our annual impairment review of goodwill and indefinite-lived intangibles.
During 2025 and 2024, we elected to perform a qualitative assessment for our annual impairment review of goodwill and indefinite-lived intangibles.
Forfeitures are recognized as they occur for all awards. We estimate the fair value of stock option awards using the Black-Scholes valuation model, which involves several assumptions and judgments including the expected term of the stock option, expected volatility, the risk-free interest rate and the expected dividend yield.
Forfeitures are recognized as they occur for all awards. Management estimates the fair value of stock option awards using the Black-Scholes valuation model, which involves several assumptions and judgments including the expected term of the stock option, expected volatility, the risk-free interest rate and the expected dividend yield.
For the 52-weeks ended December 29, 2024 and December 31, 2023, there were 344 restaurants and 327 restaurants in our Comparable Restaurant Base. Measuring our same-restaurant sales growth allows Management to evaluate the performance of our existing restaurant base.
For the 52-weeks ended December 28, 2025, December 29, 2024 and December 31, 2023 there were 381, 344 and 327 restaurants, in our Comparable Restaurant Base, respectively. Measuring our same-restaurant sales growth allows Management to evaluate the performance of our existing restaurant base.
(3) Reconciliations from Net income and Net income margin, the most comparable GAAP measures to Adjusted EBITDA and Adjusted EBITDA margin, are set forth in the schedules within the Non-GAAP Financial Measure Reconciliations section below. 42 Table of Contents Results of Operations The discussion that follows includes a comparison of our results of operations for 2024 and 2023.
(3) Reconciliations from Net income and Net income margin, the most comparable GAAP measures to Adjusted EBITDA and Adjusted EBITDA margin, respectively, are set forth in the schedules within the Non-GAAP Financial Measure Reconciliations section below. 41 Table of Contents Results of Operations The discussion that follows includes a comparison of our results of operations for 2025 and 2024.
Our principal uses of cash include capital expenditures for the development, acquisition or remodeling of restaurants, lease obligations, debt service payments and strategic infrastructure investments. Our working capital requirements are low due to our restaurants’ storage of minimal inventory and customers’ payment for purchases at the time of the sale, which frequently precedes our payment terms with suppliers.
Our principal uses of cash include capital expenditures for the development, acquisition or remodeling of restaurants, lease obligations, debt service payments and strategic infrastructure investments. Our working capital requirements are low due to our restaurants storing minimal inventory and customers pay for purchases at the time of the sale, which frequently precedes our payment terms with suppliers.
Restaurant Level Operating Profit Margin : represents Restaurant level operating profit as a percentage of restaurant sales. See Non-GAAP Financial Measure Reconciliations below for a reconciliation to Income from operations margin, the most directly comparable GAAP measure. Financial Highlights The financial results of 2024 reflect the continued growth of the Company.
Restaurant Level Operating Profit Margin : represents Restaurant level operating profit as a percentage of restaurant sales. See Non-GAAP Financial Measure Reconciliations below for a reconciliation to Income from operations margin, the most directly comparable GAAP measure. 39 Table of Contents Financial Highlights The financial results of 2025 reflect the continued growth of the Company.
We use Restaurant level operating profit and Restaurant level operating profit margin (i) to evaluate the performance and profitability of operating restaurants, individually, and in the aggregate, (ii) to compare the performance of our restaurants and markets and (iii) to make decisions regarding future spending and other operational decisions.
We use Restaurant level operating profit and Restaurant level operating profit margin (i) to evaluate the performance and profitability of operating restaurants, individually and in the aggregate, and (ii) to make decisions regarding future spending and other operational decisions.
Prior to the IPO, the expected term of stock option awards was determined based on data from publicly traded companies. The expected volatility of stock option awards is based on the historical volatilities of a set of publicly traded peer companies in a similar industry as the Company lacks company-specific historical or implied volatility information.
Prior to our IPO in October 2021, the expected term of stock option awards was determined based on data from publicly-traded companies. The expected volatility of stock option awards is based on the historical volatilities of a set of publicly-traded peer companies in a similar industry, as we lack company-specific historical or implied volatility information.
No awards were granted under the 2017 Equity Plan during 2024 or 2023, and the Company does not intend to grant any further awards under the 2017 Equity Plan. Stock-based compensation expense related to time-based stock option awards issued under the 2021 Equity Plan is recognized on a straight-line basis over the requisite service period.
No awards were granted under the 2017 Equity Plan during 2025, 2024 and 2023, and we do not intend to grant any further awards under the 2017 Equity Plan. Stock-based compensation expense related to time-based stock option awards issued under our 2021 Equity Plan is recognized on a straight-line basis over the requisite service period.
Adjusted EBITDA : represents Net income before depreciation and amortization, interest expense, income taxes, and items that we do not consider in our evaluation of ongoing core operating performance as identified in the reconciliation of Net income, the most directly comparable measure in accordance with GAAP, to Adjusted EBITDA, included in the section Non-GAAP Financial Measure Reconciliations below . 40 Table of Contents Adjusted EBITDA Margin : represents Adjusted EBITDA as a percentage of total revenues.
Adjusted EBITDA : represents Net income before depreciation and amortization, interest expense, income taxes and items that we do not consider in our evaluation of ongoing core operating performance as identified in the reconciliation of Net income, the most directly comparable measure in accordance with GAAP, to Adjusted EBITDA, included in the section Non-GAAP Financial Measure Reconciliations below .
The increase was partially offset by (i) hourly labor efficiency and (ii) the additional 53rd week in 2023. 44 Table of Contents Other Restaurant Operating Expenses Other restaurant operating expenses consist of marketing and advertising expenses, utilities, insurance and other operating variable expenses incidental to operating company-owned restaurants, such as operating supplies (including paper products, menus and to-go supplies), credit card fees, repairs and maintenance, and third-party delivery services fees.
The increase was partially offset by hourly labor efficiency. 43 Table of Contents Other Restaurant Operating Expenses Other restaurant operating expenses consist of marketing and advertising expenses, utilities, insurance and other variable expenses incidental to operating company-owned restaurants, such as operating supplies (including paper products, menus and to-go supplies), credit card fees, repairs and maintenance and third-party delivery services fees.
The risk-free interest rate is determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the expected term of the stock option award. The expected dividend yield is based on the fact that the Company has never paid cash dividends and does not have intentions of paying dividends in the foreseeable future.
The risk-free interest rate is determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the expected term of the stock option award. The expected dividend yield is based on the fact that the Company has never paid cash dividends and there is no intent to pay dividends in the foreseeable future.
FISCAL YEAR (in thousands) 2024 2023 Change Pre-opening expenses $ 10,109 $ 7,173 $ 2,936 40.9 % The increase in 2024 pre-opening expenses as compared to 2023 was primarily due to (i) the higher number of restaurants opened and under construction and (ii) the increase in rents. 45 Table of Contents General and Administrative Expenses General and administrative expenses primarily consist of costs associated with our corporate and administrative functions that support restaurant development and operations including marketing and advertising costs incurred as well as legal fees, professional fees, stock-based compensation and expenses associated with being a public company, including costs associated with our compliance with the Sarbanes-Oxley Act.
FISCAL YEAR (in thousands) 2025 2024 Change Pre-opening expenses $ 12,933 $ 10,109 $ 2,824 27.9 % The increase in 2025 pre-opening expenses as compared to 2024 was primarily due to (i) the higher number of new restaurants opened and under construction and (ii) the related increase in rent expense. 44 Table of Contents General and Administrative Expenses General and administrative expenses primarily consist of costs associated with our corporate and administrative functions that support restaurant development and operations including marketing and advertising costs incurred as well as legal fees, professional fees, stock-based compensation and expenses associated with being a public company, including costs associated with our compliance with the Sarbanes-Oxley Act.
This decrease was partially offset by the increase in restaurant sales and franchise revenues. Interest Expense Interest expense primarily consists of interest and fees on our outstanding debt and the amortization expense for debt discount and deferred issuance costs.
This was partially offset by the increase in revenues. 45 Table of Contents Interest Expense Interest expense primarily consists of interest and fees on our outstanding debt and the amortization expense for debt discount and deferred issuance costs.
(8) 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 (Loss).
(7) Severance costs are recorded in General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income. (8) 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.
Management may elect to perform a qualitative assessment to determine whether it is more likely than not that the reporting unit and/or asset group is impaired.
We have identified one reporting unit to which we have attributed goodwill. Management may elect to perform a qualitative assessment to determine whether it is more likely than not that the reporting unit and/or asset group is impaired.
Franchise-owned New Restaurant Openings (“Franchise-owned NROs”): the number of new franchise-owned First Watch restaurants commencing operations during the period. 39 Table of Contents Same-Restaurant Sales Growth : the percentage change in year-over-year restaurant sales (excluding gift card breakage) for the comparable restaurant base, which we define 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”).
Same-Restaurant Sales Growth : the percentage change in year-over-year restaurant sales (excluding gift card breakage) for the comparable restaurant base, which we define 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”).
These assumptions represented Management’s best estimate, which involved inherent uncertainties and the application of Management’s judgment. As a result, if we had used significantly different assumptions or estimates, our stock-based compensation expense could have been materially different.
These assumptions represented Management’s best estimate, which involved inherent uncertainties and the application of Management’s judgment. As a result, use of significantly different assumptions or estimates could yield a materially different stock-based compensation expense.
Although we believe that our current level of total available liquidity is sufficient to meet our short-term and long-term liquidity requirements, we regularly evaluate opportunities to improve our liquidity position in order to enhance financial flexibility.
Although we believe that our current level of total available liquidity is sufficient to meet our short-term and long-term liquidity requirements, we regularly evaluate opportunities to improve our liquidity position in order to enhance financial flexibility. We estimate that our capital expenditures will total approximately $150.0 million to $160.0 million in 2026.
For the year ended 2024, this operating metric compares the 52-week period ended December 29, 2024 with the 52-week period ended December 31, 2023, versus the 53-week fiscal year ended December 31, 2023, in order to compare like-for-like periods.
This operating metric compares the 52-week periods ended December 28, 2025, December 29, 2024 and December 31, 2023, rather than, the 53-week fiscal year ended December 31, 2023, in order to compare like-for-like periods.
We believe this measure is useful for investors to provide a consistent comparison of restaurant sales results and trends across periods within our core, established restaurant base, unaffected by results of store openings, closings and other transitional changes.
We believe this measure is useful for investors to provide a consistent comparison of restaurant sales results and trends across periods within our core, established restaurant base, unaffected by results of store openings, closings and other transitional changes. Same-Restaurant Traffic Growth : the percentage change in year-over-year traffic counts using the Comparable Restaurant Base.
(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 (Loss). 49 Table of Contents Restaurant level operating profit and Restaurant level operating profit margin - The following table reconciles Income from operations and Income from operations margin, the most comparable GAAP measures to Restaurant level operating profit and Restaurant level operating profit margin for the periods indicated: FISCAL YEAR (in thousands) 2024 2023 2022 Income from operations $ 38,907 $ 41,267 $ 16,913 Less: Franchise revenues (11,555) (14,459) (10,981) Add: General and administrative expenses 113,270 103,121 84,959 Depreciation and amortization 57,715 41,223 34,230 Transaction expenses (income), net (1) 2,587 3,147 2,513 Impairments and loss on disposal of assets (2) 525 1,359 920 Costs in connection with natural disasters (3) 312 — 382 Restaurant level operating profit $ 201,761 $ 175,658 $ 128,936 Restaurant sales $ 1,004,355 $ 877,092 $ 719,181 Income from operations margin 3.9 % 4.7 % 2.4 % Restaurant level operating profit margin 20.1 % 20.0 % 17.9 % Additional information Deferred rent expense (income) (4) $ 1,119 $ 1,891 $ 2,219 _____________________________ (1) Represents costs incurred in connection with the acquisition of franchise-owned restaurants, secondary offering costs, costs related to restaurant closures, gains or losses associated with lease or contract terminations and revaluations of contingent consideration liability.
(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. 48 Table of Contents Restaurant level operating profit and Restaurant level operating profit margin - The following table reconciles Income from operations and Income from operations margin, the most comparable GAAP measures to Restaurant level operating profit and Restaurant level operating profit margin, respectively, for the periods indicated: FISCAL YEAR (in thousands) 2025 2024 2023 Income from operations $ 27,511 $ 38,907 $ 41,267 Less: Franchise revenues (10,328) (11,555) (14,459) Add: General and administrative expenses 128,950 113,270 103,121 Depreciation and amortization 75,011 57,715 41,223 Transaction expenses, net (1) 2,533 2,587 3,147 Impairments and loss on disposal of assets (2) 448 525 1,359 Costs in connection with natural disasters (3) — 312 — Restaurant level operating profit $ 224,125 $ 201,761 $ 175,658 Restaurant sales $ 1,212,173 $ 1,004,355 $ 877,092 Income from operations margin 2.3 % 3.9 % 4.7 % Restaurant level operating profit margin 18.5 % 20.1 % 20.0 % Additional information Deferred rent expense (4) $ 167 $ 1,119 $ 1,891 _____________________________ (1) Represents costs incurred in connection with the acquisition of franchise-owned restaurants, secondary offering costs, costs related to restaurant closures, expenses related to debt and revaluations of contingent consideration liability.
This decrease was partially offset by (i) wage increases and (ii) higher health insurance costs. The increase in labor and other related expenses during 2024 as compared to 2023 was primarily due to (i) the increase in staffing levels to support the increase in corporate-owned restaurants (ii) wage increases and (iii) higher health insurance costs .
This increase was mostly offset by (i) menu price increases and (ii) improved hourly labor efficiency. The increase in labor and other related expenses during 2025 as compared to 2024 was primarily due to (i) the increase in staffing levels to support the increase in company-owned restaurants, (ii) wage increases and (iii) higher health insurance costs.
We also acquired 22 operating restaurants from our franchisees in the execution of our growth strategy. See Note 3, Business Acquisitions , in the accompanying notes to the consolidated financial statements for additional information. At December 29, 2024, the Company had a total of 572 system-wide restaurants.
We also acquired 19 operating resta urants from our franchisees in the execution of our growth strategy. See Note 3, Business Acquisitions , in the acc ompanying notes to the consolidated financial statements for additional information. At December 28, 2025, the Company had a total of 633 system -wide restaurants.
FISCAL YEAR (in thousands) 2024 2023 Change Depreciation and amortization $ 57,715 $ 41,223 $ 16,492 40.0 % The increase in depreciation and amortization during 2024 as compared to 2023 was primarily due to additional NRO assets and restaurants acquired, including reacquired rights from franchisees.
FISCAL YEAR (in thousands) 2025 2024 Change Depreciation and amortization $ 75,011 $ 57,715 $ 17,296 30.0 % The increase in depreciation and amortization during 2025 as compared to 2024 was primarily due to additional NRO assets and restaurants acquired, including reacquired rights from franchisees.
Stock-based compensation expense related to time-based stock option awards issued under the 2017 Equity Plan is recognized on an accelerated recognition method over the requisite service period.
Stock-Based Compensation and Fair Value of Common Stock Stock-based compensation expense is measured based on the award’s fair value at the date of grant. Stock-based compensation expense related to time-based stock option awards issued under our 2017 Equity Plan is recognized on an accelerated recognition method over the requisite service period.
Income from operations decreased during 2024 as compared to 2023 primarily due to (i) higher operating costs and depreciation expense driven by our restaurant growth and acquisitions of restaurants from franchisees, as well as (ii) higher general and administrative expenses primarily attributable to additional employee headcount and performance-based compensation and (iii) the 53rd week in 2023.
Income from operations decreased during 2025 as compared to 2024 due to higher (i) restaurant operating expenses, (ii) depreciation and amortization expenses driven by our restaurant growth and our acquisition of restaurants from franchisees, and (iii) general and administrative expenses primarily attributable to increased marketing costs, additional employee headcount and compensation.
The increase in other restaurant operating expenses during 2024 as compared to 2023 was primarily due to the increase in the number of restaurants driving increases in certain expenses including (i) $ 7.5 million of additional credit card, delivery, and license fees, (ii) $4.6 million increase in utilities and repair and maintenance expenses, (iii) $3.4 million related to operating supplies and (iv) $ 1.3 million related to restaurant advertising costs .
The increase in other restaurant operating expenses during 2025 as compared to 2024 was primarily due to the increase in the number of restaurants driving increases in certain expenses including (i) $10.9 million related to operating supplies, (ii) $10.4 million in utilities and repair and maintenance expenses, (iii) $9.1 million in third-party delivery fees, (iv) $4.0 million in credit card fees and (v) $1.4 million in insurance expenses.
Critical estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows and discount rates. In addition, we have estimated the value and economic lives of certain tangible assets based on historical information, industry estimates and averages, which are used to calculate depreciation and amortization expense.
In addition, we have estimated the value and economic lives of certain tangible assets based on historical information, industry estimates and averages, which are used to calculate depreciation and amortization expense.
Leases We lease our restaurant facilities and corporate offices, as well as certain restaurant equipment under various non-cancelable agreements. At the inception of each lease, we evaluate the expected term which includes reasonably certain renewal options, and the classification as either an operating leases or a finance lease. Lease liabilities represent the present value of future lease payments.
At the inception of each lease, we evaluate the expected term which includes reasonably certain renewal options, and classify the lease as either an operating leases or a finance lease. Lease liabilities represent the present value of future lease payments.
The increase in occupancy expenses during 2024 as compared to 2023 was primarily due to the increase in the number of company-owned restaurants. Pre-opening Expenses Pre-opening expenses are costs incurred to open new company-owned restaurants.
The increase in occupancy expenses during 2025 as compared to 2024 was primarily due to the increase in the number of company-owned restaurants. Pre-opening Expenses Pre-opening expenses are costs incurred to open new company-owned restaurants. Pre-opening expenses include rent expense, manager salaries, recruiting expenses, employee payroll and training costs.
Liquidity and Capital Resources Liquidity As of December 29, 2024, we had cash and cash equivalents of $33.3 million and outstanding borrowings under the Credit Facility of $193.8 million, excluding unamortized debt discount and deferred issuance costs.
Liquidity and Capital Resources Liquidity As of December 28, 2025, we had cash and cash equivalents of $21.2 million and outstanding borrowings under the Credit Facility of $267.6 million, excluding unamortized debt discount and deferred issuance costs.
Refer to Note 18, Commitments and Contingencies, in the accompanying consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K for additional information. 51 Table of Contents Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K, which have been prepared in accordance with GAAP.
Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K, which have been prepared in accordance with GAAP.
Overview First Watch is an award-winning Daytime Dining concept serving made-to-order breakfast, brunch and lunch using fresh ingredients. The Company’s common stock trades on Nasdaq under the ticker symbol “FWRG.” A recipient of hundreds of local “Best Breakfast” and “Best Brunch” accolades, First Watch’s award-winning chef-driven menu includes elevated executions of classic favorites for breakfast, brunch and lunch.
Our common stock trades on Nasdaq under the ticker symbol “FWRG.” A recipient of many local “Best Breakfast” and “Best Brunch” accolades, First Watch’s award-winning chef-driven menu includes elevated executions of classic favorites for breakfast, brunch and lunch.
Factors that influence labor costs include minimum wage and payroll tax legislation, health care costs, the number and performance of our company-owned restaurants and increased competition for qualified staff.
Labor and Other Related Expenses Labor and other related expenses include hourly and management wages, bonuses, payroll taxes, workers’ compensation expense and employee benefits. Factors that influence labor costs include minimum wage and payroll tax legislation, health care costs, the number and performance of our company-owned restaurants and competition for qualified staff.
These costs are recorded within General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income (Loss). (7) Severance costs are recorded in General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income (Loss).
These costs are recorded in General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income. (6) 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.
The increase was partially offset by (i) 2024 negative same-restaurant sales growth of 0.5% and (ii) the 53rd week of sales in 2023 . 43 Table of Contents Franchise Revenues Franchise revenues are comprised of sales-based royalty fees, system fund contributions and the amortization of upfront initial franchise fees, which are recognized as revenue on a straight-line basis over the term of the franchise agreement.
The increase was partially offset by increased promotional usage. Franchise Revenues Franchise revenues are comprised of sales-based royalty fees, system fund contributions and the amortization of upfront initial franchise fees, which are recognized as revenue on a straight-line basis over the term of the franchise agreement.
Selected Operating Data FISCAL YEAR 2024 2023 2022 Number of weeks in fiscal year 52 53 52 System-wide restaurants 572 524 474 Company-owned 489 425 366 Franchise-owned 83 99 108 System-wide sales (in thousands) 1,184,469 1,103,089 914,816 Same-restaurant sales growth (1) (0.5) % 7.6 % 14.5 % Same-restaurant traffic growth (1) (4.0) % 0.2 % 7.7 % AUV (in thousands) $ 2,204 $ 2,250 $ 2,032 Income from operations (in thousands) $ 38,907 $ 41,267 $ 16,913 Income from operations margin 3.9 % 4.7 % 2.4 % Restaurant level operating profit (in thousands) (2) $ 201,761 $ 175,658 $ 128,936 Restaurant level operating profit margin (2) 20.1 % 20.0 % 17.9 % Net income (in thousands) $ 18,925 $ 25,385 $ 6,907 Net income margin 1.9 % 2.8 % 0.9 % Adjusted EBITDA (in thousands) (3) $ 113,836 $ 99,483 $ 69,278 Adjusted EBITDA margin (3) 11.2 % 11.2 % 9.5 % ________________ (1) Comparing th e 52-week period ended December 29, 2024 with the 52-week period ended December 31, 2023 in order to compare like-for-like periods.
We also plan to close three company-owned restaurants, resulting in a total of 59 to 63 net new system-wide restaurants in 2026. 40 Table of Contents Selected Operating Data FISCAL YEAR 2025 2024 2023 Number of weeks in fiscal year 52 52 53 System-wide restaurants 633 572 524 Company-owned 560 489 425 Franchise-owned 73 83 99 System-wide sales (in thousands) 1,375,045 1,184,469 1,103,089 Same-restaurant sales growth (1) 3.6 % (0.5) % 7.6 % Same-restaurant traffic growth (1) 0.5 % (4.0) % 0.2 % AUV (in thousands) $ 2,294 $ 2,204 $ 2,250 Income from operations (in thousands) $ 27,511 $ 38,907 $ 41,267 Income from operations margin 2.3 % 3.9 % 4.7 % Restaurant level operating profit (in thousands) (2) $ 224,125 $ 201,761 $ 175,658 Restaurant level operating profit margin (2) 18.5 % 20.1 % 20.0 % Net income (in thousands) $ 19,432 $ 18,925 $ 25,385 Net income margin 1.6 % 1.9 % 2.8 % Adjusted EBITDA (in thousands) (3) $ 120,918 $ 113,836 $ 99,483 Adjusted EBITDA margin (3) 9.9 % 11.2 % 11.2 % ________________ (1) Comparing th e 52-week periods ended December 28, 2025, December 29, 2024 and December 31, 2023 in order to compare like-for-like periods.
The following table summarizes our results of operations and the percentages of items in our Consolidated Statements of Operations and Comprehensive Income (Loss) in relation to Total revenues or, where indicated, Restaurant sales for 2024 and 2023: FISCAL YEAR (in thousands) 2024 2023 Revenues Restaurant sales $ 1,004,355 98.9 % $ 877,092 98.4 % Franchise revenues 11,555 1.1 % 14,459 1.6 % Total revenues 1,015,910 100.0 % 891,551 100.0 % Operating costs and expenses Restaurant operating expenses (1) (exclusive of depreciation and amortization shown below): Food and beverage costs 223,097 22.2 % 197,374 22.5 % Labor and other related expenses 335,038 33.4 % 294,010 33.5 % Other restaurant operating expenses 151,968 15.1 % 134,477 15.3 % Occupancy expenses 82,694 8.2 % 68,400 7.8 % Pre-opening expenses 10,109 1.0 % 7,173 0.8 % General and administrative expenses 113,270 11.1 % 103,121 11.6 % Depreciation and amortization 57,715 5.7 % 41,223 4.6 % Impairments and loss on disposal of assets 525 0.1 % 1,359 0.2 % Transaction expenses, net 2,587 0.3 % 3,147 0.4 % Total operating costs and expenses 977,003 96.2 % 850,284 95.4 % Income from operations (1) 38,907 3.9 % 41,267 4.7 % Interest expense (12,640) (1.2) % (8,063) (0.9) % Other income, net 1,759 0.2 % 2,871 0.3 % Income before income taxes 28,026 2.8 % 36,075 4.0 % Income tax expense (9,101) (0.9) % (10,690) (1.2) % Net income $ 18,925 1.9 % $ 25,385 2.8 % ____________ (1) Percentages are calculated as a percentage of restaurant sales.
The following table summarizes our results of operations and the percentages of items in our Consolidated Statements of Operations and Comprehensive Income in relation to Total revenues or, where indicated, Restaurant sales for 2025 and 2024: FISCAL YEAR (in thousands) 2025 2024 Revenues Restaurant sales $ 1,212,173 99.2 % $ 1,004,355 98.9 % Franchise revenues 10,328 0.8 % 11,555 1.1 % Total revenues 1,222,501 100.0 % 1,015,910 100.0 % Operating costs and expenses Restaurant operating expenses (1) (exclusive of depreciation and amortization shown below): Food and beverage costs 280,098 23.1 % 223,097 22.2 % Labor and other related expenses 405,544 33.5 % 335,038 33.4 % Other restaurant operating expenses 188,685 15.6 % 151,968 15.1 % Occupancy expenses 100,788 8.3 % 82,694 8.2 % Pre-opening expenses 12,933 1.1 % 10,109 1.0 % General and administrative expenses 128,950 10.5 % 113,270 11.1 % Depreciation and amortization 75,011 6.1 % 57,715 5.7 % Impairments and loss on disposal of assets 448 — % 525 0.1 % Transaction expenses, net 2,533 0.2 % 2,587 0.3 % Total operating costs and expenses 1,194,990 97.7 % 977,003 96.2 % Income from operations (1) 27,511 2.3 % 38,907 3.9 % Interest expense (16,699) (1.4) % (12,640) (1.2) % Other income, net 1,321 0.1 % 1,759 0.2 % Income before income taxes 12,133 1.0 % 28,026 2.8 % Income tax benefit (expense) 7,299 0.6 % (9,101) (0.9) % Net income $ 19,432 1.6 % $ 18,925 1.9 % ____________ (1) As a percentage of restaurant sales.
Summary of Cash Flows The following table presents a summary of our cash provided by (used in) operating, investing and financing activities for 2024 and 2023: FISCAL YEAR (in thousands) 2024 2023 Cash provided by operating activities $ 115,673 $ 95,338 Cash used in investing activities (206,653) (123,370) Cash provided by financing activities 74,331 28,070 Net (decrease) increase in cash and cash equivalents and restricted cash $ (16,649) $ 38 Cash provided by operations is our typical source of liquidity used (i) to fund capital expenditures for new restaurants, (ii) to maintain and remodel existing restaurants and (iii) for debt service.
We intend to fund the capital expenditures primarily with cash generated from our operating activities as well as with borrowings pursuant to our Credit Agreement. 49 Table of Contents Summary of Cash Flows The following table presents a summary of our cash provided by (used in) operating, investing and financing activities for 2025 and 2024: FISCAL YEAR (in thousands) 2025 2024 Cash provided by operating activities $ 125,912 $ 115,673 Cash used in investing activities (213,764) (206,653) Cash provided by financing activities 75,786 74,331 Net decrease in cash and cash equivalents $ (12,066) $ (16,649) Cash provided by operations is our typical source of liquidity used (i) to fund capital expenditures for new restaurants, (ii) to maintain and remodel existing restaurants and (iii) for debt service.
(2) Represents costs incurred in connection with the acquisition of franchise-owned restaurants, expenses related to debt, secondary offering costs, costs related to restaurant closures, gains or losses associated with lease or contract terminations and revaluations of contingent consideration liability. (3) Represents costs related to process improvements and strategic initiatives.
(2) Represents costs incurred in connection with the acquisition of franchise-owned restaurants, secondary offering costs, costs related to restaurant closures, expenses related to debt and revaluations of contingent consideration liability. (3) 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.
FISCAL YEAR (in thousands) 2024 2023 Change Interest expense $ (12,640) $ (8,063) $ (4,577) 56.8 % The increase in interest expense during 2024 as compared to 2023 was primarily due (i) an increase borrowings associated with franchise acquisitions and (ii) higher interest rates.
FISCAL YEAR (in thousands) 2025 2024 Change Interest expense $ (16,699) $ (12,640) $ (4,059) 32.1 % The increase in interest expense during 2025 as compared to 2024 was primarily due an increase in borrowings associated with franchise acquisitions.
Management reviews the number of new restaurants to assess new restaurant growth and company-owned restaurant sales.
Management reviews the number of new restaurants to assess new restaurant growth and company-owned restaurant sales. Franchise-owned New Restaurant Openings (“Franchise-owned NROs”): the number of new franchise-owned First Watch restaurants commencing operations during the period.
Cash used in investing activities increas ed to $206.7 million during 2024 from $123.4 million du ring 2023 primarily as a result of the increase in capital expenditures to support our restaurant growth and the acquisitions of restaurants from our franchisees.
Cash used in investing activities increas ed during 2025 from 2024 primarily as a result of the increase in capital expenditures to support our restaurant growth, partially offset by the decrease in amounts paid to acquire restaurants from our franchisees.
We had availability of $123.3 million under our revolving credit facility of $125.0 million, of which $1.7 million is reserved under letters of credit, and availability of $27.5 million under our delayed draw term loan pursuant to our credit agreement, as amended (“Credit Agreement”).
We had availability of $66.9 million under our revolving credit facility of $125.0 million, of which $2.1 million is reserved under letters of credit pursuant to our credit agreement dated as of October 6, 2021 as amended (“Credit Agreement”).
Such indicators could include negative operating performance of our restaurants, economic and restaurant industry trends, legal factors, significant competition or changes in our business strategy.
Such indicators could include negative operating performance of our restaurants, economic and restaurant industry trends, legal factors, significant competition or changes in our business strategy. Adverse changes in these factors could have a significant impact on the recoverability of our goodwill and indefinite-lived intangible assets and could have a material impact on our consolidated financial statements.
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.
We do not recognize the restaurant sales from our franchise-owned restaurants as revenue.
Depreciation and Amortization Depreciation and amortization consists of the depreciation of fixed assets, including leasehold improvements, fixtures and equipment and the amortization of definite-lived intangible assets, which are primarily comprised of franchise rights.
The increase in 2025 was partially offset in part by a $2.4 million decrease in recruiting and training expenses. Depreciation and Amortization Depreciation and amortization consists of the depreciation of fixed assets, including leasehold improvements, fixtures and equipment and the amortization of definite-lived intangible assets, which are primarily comprised of franchise rights.
Net Income and Net Income Margin FISCAL YEAR (in thousands) 2024 2023 Change Net income $ 18,925 $ 25,385 $ (6,460) (25.4) % Net income margin 1.9 % 2.8 % (0.9)% The decrease in net income and net income margin during 2024 as compared to 2023 was primarily due to (i) the decrease in income from operations including deleveraging of occupancy expenses, (ii) increase in depreciation and amortization attributed primarily to locations opened and acquired in 2024 and (iii) the increase in interest expense associated with increased borrowings to fund acquisitions.
Net Income FISCAL YEAR (in thousands) 2025 2024 Change Net income $ 19,432 $ 18,925 $ 507 2.7 % Net income margin 1.6 % 2.8 % (1.2)% The decrease in net income margin during 2025 as compared to 2024 was primarily due to (i) the decrease in income from operations as expenses inflated rapidly early in the year, (ii) increased depreciation and amortization associated with new company-owned restaurants opened and acquired in 2025 and 2024 and (iii) interest expense from the borrowings to fund acquisitions, partially offset by the impact of the income tax benefit recognized in 2025.
Such indicators may include, among others: negative operating performance of our restaurants, economic and restaurant industry trends, legal factors, significant competition or changes in our business strategy.
Such indicators may include, among others: negative operating performance of our restaurants, economic and restaurant industry trends, legal factors, significant competition or changes in our business strategy. Adverse changes in these factors could have a significant impact on the recoverability of these assets and the resulting impairment charge could be material to our consolidated financial statements.
FISCAL YEAR (in thousands) 2024 2023 Change General and administrative expenses $ 113,270 $ 103,121 $ 10,149 9.8 % The increase in general and administrative expenses during 2024 as compared to 2023 was mainly due to (i) $5.2 million increase in compensation and other related expenses such as wage increases, stock compensation and additional employee headcount to support growth, (ii) $2.7 million increase in licenses and fees related to information technology, (iii) $1.8 million related to consulting and professional services partially offset by $1.1 million related to a decrease in brand research costs and (iv) approximately $1.6 million related to travel and other miscellaneous expenses.
FISCAL YEAR (in thousands) 2025 2024 Change General and administrative expenses $ 128,950 $ 113,270 $ 15,680 13.8 % The increase in general and administrative expenses during 2025 as compared to 2024 was mainly due to (i) an $8.0 million increase in marketing expenses, (ii) a $6.7 million increase in compensation and other related expenses from wage increases and additional employee headcount to support growth, and (iii) a $2.1 million increase in licenses and fees related to information technology due to increase in restaurants.
The timing and nature of these commitments are expected to have an impact on our liquidity and capital requirements in future periods.
Contractual Obligations Material contractual obligations arising in the normal course of business primarily consist of operating and finance lease obligations, long-term debt and purchase obligations. The timing and nature of these commitments are expected to have an impact on our liquidity and capital requirements in future periods.
FISCAL YEAR (in thousands) 2024 2023 Change Labor and other related expenses $ 335,038 $ 294,010 $ 41,028 14.0 % As a percentage of restaurant sales 33.4 % 33.5 % (0.1)% Labor and other related expenses as a percentage of restaurant sales decreased during 2024 as compared to 2023 primarily as a result of (i) menu price increases and (ii) improved hourly labor efficie ncy.
FISCAL YEAR (in thousands) 2025 2024 Change Labor and other related expenses $ 405,544 $ 335,038 $ 70,506 21.0 % As a percentage of restaurant sales 33.5 % 33.4 % 0.1% Labor and other related expenses as a percentage of restaurant sales increased during 2025 as compared to 2024 primarily as a result of (i) wage increases and (ii) higher health insurance costs.
All references to 2024 and 2022 reflect the results of the 52-week fiscal year ended December 29, 2024 and December 25, 2022. All references to 2023 reflect the results of the 53-week fiscal year ended December 31, 2023. We report financial and operating information in one segment.
All references to 2023 reflect the results of the 53-week fiscal year ended December 31, 2023 unless otherwise stated. We report financial and operating information in one segment. This section of this Annual Report on the Form 10-K generally discusses Fiscal 2025 and Fiscal 2024 and year-over-year comparisons between Fiscal 2025 and Fiscal 2024.
This was partially offset by the increase in (i) operating costs and expenses driven by our restaurant growth and (ii) deleverage of occupancy expenses.
This was partially offset by (i) the increase in inflation across commodities and (ii) increases in operating expenses due to restaurant growth.
The decrease was partially offset by commodity inflation of 3.2% . Food and bevera ge costs increased during 2024 as compared to 2023 primarily as a result of (i) the 14.5% increase in restaurant sales, (ii) opening and acquiring restaurants in 2024, (iii) recognizing a full year of costs for restaurants opened and acquired in 2023 and (iv) commodity inflation.
Food and beverage costs increased during 2025 as compared to 2024 primarily as a result of (i) the 20.7% increase in restaurant sales, (ii) opening and acquiring restaurants in 2025, (iii) recognizing a full year of costs for restaurants opened and acquired in 2024, (iv) commodity inflation experienced in eggs, coffee, bacon and avocados and (v) increased portion size in certain menu items.
Food and Beverage Costs The components of food and beverage costs at company-owned restaurants are variable by nature, change with sales volume, are impacted by product mix and are subject to increases or decreases in commodity costs.
Food and Beverage Costs Food and beverage costs at company-owned restaurants vary with sales volume and are subject to increases and declines in commodity costs.
The Company’s 52- or 53-week fiscal years end on the last Sunday of each calendar year. Its fiscal quarters are comprised of 13 weeks each and end on the 13th Sunday of each quarter, save for 53-week years during which the fourth quarter ends on the 14th Sunday of the fourth quarter.
Our fiscal quarters are comprised of 13 weeks each and end on the 13th Sunday of each quarter, except for 53-week years, during which the fourth quarter ends on the 14th Sunday of the fourth quarter. All references to 2025 and 2024 reflect the results of the 52-week fiscal years ended December 28, 2025 and December 29, 2024, respectively.
FISCAL YEAR (in thousands) 2024 2023 Change Occupancy expenses $ 82,694 $ 68,400 $ 14,294 20.9 % As a percentage of restaurant sales 8.2 % 7.8 % 0.4% The increase in occupancy expenses as a percentage of restaurant sales during 2024 as compared to 2023 was primarily due to higher rent expense and the deleverage associated with negative same-restaurant sales grow th.
FISCAL YEAR (in thousands) 2025 2024 Change Occupancy expenses $ 100,788 $ 82,694 $ 18,094 21.9 % As a percentage of restaurant sales 8.3 % 8.2 % 0.1% The increase in occupancy expenses as a percentage of restaurant sales during 2025 as compared to 2024 was primarily due to higher rent expense associated with new restaurants mostly offset by leveraging increased restaurant sales.
FISCAL YEAR 2024 Company-owned Franchise-owned Total Beginning of period 425 99 524 New restaurants 43 7 50 Acquisitions of franchise-owned restaurants 22 (22) — Closures (1) (1) (2) End of period 489 83 572 We expect to open betwe en 55 to 58 company-owned restaurants and 7 to 9 franchise-owned restaurants during 2025.
FISCAL YEAR 2025 Company-owned Franchise-owned Total Beginning of period 489 83 572 New restaurants 55 9 64 Acquisitions of franchise-owned restaurants 19 (19) — Closures (3) — (3) End of period 560 73 633 We expect to open between 53 to 55 company-owned restaurants and 9 to 11 franchise-owned restaurants during 2026.
Cash provided by operations increased in 2024 as compared to 2023 primarily due t o the addition of new and acquired restaurants.
Cash provided by operations increased in 2025 as compared to 2024 primarily due to (i) the addition of new and acquired restaurants, (ii) the timing of operational payments and (iii) the impact of non-cash charges, offset by the decrease to income from operations.
See Non-GAAP Financial Measure Reconciliations below for a reconciliation to Net income margin, the most directly comparable GAAP measure. Restaurant Level Operating Profit : represents 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.
Restaurant Level Operating Profit : represents 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.
Financial highlights for the 52-weeks ended December 29, 2024 as compared, unless otherwise indicated below, to the 53-weeks ended December 31, 2023, reflected the continued momentum of our strong operating performance and include the following: • Total revenues increase d 13.9% to $1.0 billion from $891.6 million in 2023 • System-wide sales increased to $1.2 billion from $1.1 billion in 2023 • Same-restaurant sales growth of negative 0.5%* • Same-restaurant traffic growth of negative 4.0%* • Income from operations decreased to $38.9 million from $41.3 million in 2023 • Income from operations margin decreased to 3.9% from 4.7% in 2023 • Restaurant level operating profit** increased to $201.8 million from $175.7 million in 2023 • Restaurant level operating profit margin** increased to 20.1% f rom 20.0% in 2023 • Net income decreased t o $18.9 million from $25.4 million in 2023 • Adju sted EBITDA** increased to $113.8 million from $99.5 million in 2023 • O pened 50 system-wide restaurants (43 company-owned and 7 franchise-owned) across 19 states resulting in a total of 572 system-wide restaurants (489 company-owned and 83 franchise-owned) across 29 state s ___________________ *Comparison to the 52-week periods ended December 29, 2024 and December 31, 2023 in order to compare like-for-like periods.
Financial highlights for 2025 as compared to 2024 include the following: • Total revenues increased 20.3% to $1.2 billion from $1.0 billion in 2024 • System-wide sales increased to $1.4 billion from $1.2 billion in 2024 • Same-restaurant sales growth of 3.6% • Same-restaurant traffic growth of 0.5% • Income from operations decreased to $27.5 million from $38.9 million in 2024 • Income from operations margin decreased to 2.3% from 3.9% in 2024 • Restaurant level operating profit* increased to $224.1 million from $201.8 million in 2024 • Restaurant level operating profit margin* decreased to 18.5% from 20.1% in 2024 • Net income increased t o $19.4 million f rom $18.9 million in 2024 • Adju sted EBITDA* increased to $120.9 million f rom $113.8 million in 2024 • Opened 64 system-wide restaurants (55 company-owned and 9 franchise-owned) across 23 states, resulting in a total of 633 system-wide restaurants (560 company-owned and 73 franchise-owned) across 32 states ___________________ * See Non-GAAP Financial Measure Reconciliations section below.
See Note 17, Stock-Based Compensation , in the accompanying notes to the consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K for additional information.
Purchase obligations also include firm minimum commitments in excess of 12 months for certain contracts. Refer to Note 18, Commitments and Contingencies, in the accompanying consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K for additional information.
If the carrying amount of the asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized. Definite-lived intangible assets consist of franchise rights which arose from the purchase price allocation in connection with the Advent Acquisition and also include reacquired rights from the Company ’ s acquisitions of franchised restaurants.
If the carrying amount of the asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized. Definite-lived intangible assets consist of rights valued in business combinations.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe expect a high-single digit percentage increase in our 2025 commodity prices as compared to the prior year. In 2024, we have negotiated annual pricing for approximately 30% of our market basket. Other commodities are purchased based upon price ranges established with vendors and are subject to fixed prices or fixed formulas for 30-to-90 day periods.
Biggest changeWe expect a 1% to 3% increase in our 2026 commodity prices as compared to the prior year. In 2026, we expect that we will negotiate annual pricing for approximately 30% of our market basket. Other commodities are purchased based upon price ranges established with vendors and are subject to fixed prices or fixed formulas for 30-to-90 day periods.
These interest rate swaps have an aggregate notional amount of $60 million and mature on June 30, 2027. Under the terms of the interest rate swaps, the Company will pay a weighted average fixed rate of 4.42% on the notional amount and will receive payments from the counterparties based on the three-month secured overnight financing rate.
These interest rate swaps have an aggregate notional amount of $60 million and mature on June 30, 2027. Under the terms of these interest rate swaps, we will pay a weighted average fixed rate of 4.42% on the notional amount and will receive payments from the counterparties based on the three-month secured overnight financing rate.
Under the terms of the interest rate swap agreements, the Company will pay a weighted average fixed rate of 4.16% on the notional amount and will receive payments from the counterparties based on the three-month secured overnight financing rate. On May 17, 2024, the Company entered into two additional variable-to-fixed interest rate swaps.
Under the terms of these interest rate swap agreements, we will pay a weighted average fixed rate of 4.16% on the notional amount and will receive payments from the counterparties based on the three-month secured overnight financing rate. On May 17, 2024, we entered into two additional variable-to-fixed interest rate swaps.
Refer to Note 10, Debt, and Note 11, Interest Rate Swaps , in the accompanying notes to the consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K for more information.
Refer to Note 10, Debt, and Note 11, Interest Rate Swaps , in the accompanying notes to the consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K for more information. 54 Table of Contents
However, elevated inflation in commodity markets and substantial increases in costs and expenses could impact our results of operations to the extent that such increases cannot be offset by menu price increases. Currently we do not use financial instruments to hedge our commodity risk. The Company’s market basket experienced cost inflation of 320 basis points in 2024.
However, elevated inflation in commodity markets and substantial increases in costs and expenses could impact our results of operations to the extent that such increases cannot be offset by menu price increases. Currently we do not use financial instruments to hedge our commodity risk. Our market basket experienced cost inflation of 5% in 2025.
Interest Rate Risk As of December 29, 2024, we had $193.8 million in outstanding borrowings, excluding unamortized debt discount and deferred issuance costs.
Interest Rate Risk As of December 28, 2025, we had $267.6 million in outstanding borrowings, excluding unamortized debt discount and deferred issuance costs.

Other FWRG 10-K year-over-year comparisons