FWRG · First Watch Restaurant Group, Inc.

First Watch Restaurant Group reported Q1 2026 results that showed solid top-line growth and margin expansion, though net loss widened due to higher expenses. Total revenues increased 17.3% to $331.0 million, driven by 2.8% same-restaurant sales growth and the addition of 16 new system-wide restaurants. Same-restaurant traffic declined 2.0%, indicating that sales growth was primarily driven by higher average check, likely from menu price increases and mix shifts. Restaurant-level operating profit margin improved to 18.5% from 16.5%, reflecting better cost management, particularly in food and beverage costs (22.6% of restaurant sales vs. 23.8% last year) and labor efficiencies (33.7% vs. 34.6%). However, income from operations margin decreased to 0.3% from 0.4%, as general and administrative expenses grew faster than revenue (up 32.2% to $39.9 million), partly due to stock-based compensation and strategic transition costs. Net loss increased to $(2.7) million from $(0.8) million, impacted by higher interest expense ($4.8 million vs. $3.3 million) and depreciation ($21.4 million vs. $16.6 million) from restaurant growth. Adjusted EBITDA rose 22.2% to $27.8 million, with margin expanding to 8.4% from 8.1%. Management highlighted strong execution and reaffirmed full-year top-line guidance while raising the low end of Adjusted EBITDA guidance to $133-$140 million. The company continues to invest aggressively in unit growth, with 59-63 net new restaurants planned for fiscal 2026 and capital expenditures of $150-$160 million. The improved restaurant-level margins and raised EBITDA guidance signal confidence in operational leverage, though the net loss and declining traffic warrant monitoring.