How the Bradenton-based restaurant chain First Watch is growing as industry struggles
In an environment where restaurants struggle with rising prices, staffing challenges and the lingering threat of COVID-19, Bradenton-based First Watch managed to post strong earnings in the second quarter of 2022.
“Our second quarter performance reaffirms First Watch as one of the most consistent, best-performing concepts in the restaurant industry,” Chris Tomasso, CEO and president, said in a press release.
The second-quarter report covers the company’s financial results for the 13 weeks ending June 2.
How did First Watch fare so well during such a difficult time?
“We prioritized the customer experience and our customers,” said Matt Eisenacher, senior vice president of brand strategy.
“During COVID, you saw most restaurants shrink their menu. We maintained the entirety of our menu and changed our menu seasonally every 10 weeks with new flavors and ingredients,” he said.
“It was a big part of our recovery. The customer came back to an experience that was comforting to them. We invested in our guests, innovated on our menu and maintained our value proposition,” Eisenacher said.
Among the highlights of the quarterly report:
▪ System-wide sales increased 20% to $231.2 million from $192.6 million in the same quarter in 2021.
▪ Total quarterly revenues increased 19.8% to $184.5 million from $154.0 million last year.
▪ Same-restaurant sales increased 13.4% compared to 2021 and 30.2% relative to the same quarter in 2019 (the last pre-COVID year).
▪ First Watch opened nine system-wide restaurants (five company-owned and four franchise-owned) across seven states, resulting in a total of 449 system-wide restaurants (350 company-owned and 99 franchise-owned) across 28 states.
In response to the strong earnings report, First Watch, which serves breakfast, brunch and lunch, raised its 2022 outlook.
First Watch reported it expects total revenue growth of approximately 20% relative to 2021, and that its adjusted earnings before interest, taxes, depreciation and amortization is in the range of $70-72 million.
First Watch plans capital expenditures in the range of $60 million to $70 million invested primarily in new restaurant projects, planned remodels and new in-restaurant technology.
Also planned are 30 to 35 new company-owned restaurants and eight to 13 new franchise-owned restaurants for fiscal year 2022.
Total revenues increased 19.8% to $184.5 million in the second quarter primarily due to same-restaurant sales growth of 13.4%, traffic growth of 8.1%, menu price increases and sustained off-premises sales, 18 company-owned restaurants that opened between June 2021 and June 2022, and the increase in franchise revenues.
On the down side, income from operations decreased to $5.1 million during the quarter from $12.3 million, primarily due to inflation in the cost of food and supplies, increase in wages and staffing, higher operating costs and expenses driven by restaurant growth and higher general and administrative expenses mainly due to stock-based compensation.
Ken Pendery founded the company in Pacific Grove, Calif., in 1983, and moved company headquarters to Bradenton in 1986.
In July of 2021, the company announced its move into a new 39,000-square-foot corporate headquarters at 8725 Pendery Place, University Park.
Three months later, First Watch Restaurant Group rolled out its initial public offering of stock at the NASDAQ exchange in New York City.
Trading under the symbol FWRG, the company’s stock was trading at $18.07 Wednesday morning.
