First Watch Restaurant Group Inc
For the period ended Mar 30, 2025. Filed May 6, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 30, 2025 · Filed May 6, 2025
FWRG$12.86-2.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-29; filed 2024-11-07.
0001789940-24-000146
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-30; filed 2025-05-06.
0001789940-25-000041
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 128 previous paragraphs and 124 current paragraphs.
57 unchanged; 51 reworded; 16 added; 20 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 24 previous and 23 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
•Total revenues increased 16.4% to $282.2 million in the first quarter of 2025 from $242.4 million in the first quarter of 2024
Current report
•Same-restaurant traffic growth ofnegative 0.7%
Current report
•Restaurant level operating profit margin* decreased to 16.5% in the first quarter of 2025 from 20.8% in the first quarter of 2024
Current report
•Adjusted EBITDA*decreased to$22.8 million in the first quarter of 2025 from $28.6 million in the first quarter of 2024
Current report
The increase in other restaurant operating expenses during the thirteen weeks ended March 30, 2025 as compared to the same period in the prior year primarily due to the increase in the number of restaurants driving increases expenses including (i) $2.5 million utilities and repair and maintenance expenses, (ii) $2.2 million operating supplies, (iii) $1.2 million third-party delivery fees, (iv) $0.9 million credit card fees, (v) $0.4 million insurance expense and (vi) $0.3 million restaurant marketing.
Current report
The increase in general and administrative expenses during the thirteen weeks ended March 30, 2025 as compared to the same period in the prior year was mainly due to (i)$1.7 million increase in marketing expenses, (ii) $0.5 million increase in licenses and fees including information technology related expenses for an increased number of restaurants and (iii) approximately $0.2 million related to other expenses.
Current report
Income from operations margin decreased during the thirteen weeks ended March 30, 2025 as compared to the same period in the prior year primarily due to increases in restaurant level expenses as a percent of restaurant sales, primarily (i) food and beverage cost inflation, (ii) labor and other related expense including health insurance, (iii) higher depreciation and amortization expense driven by restaurant growth, (iv) other restaurant operating expenses including utilities, supplies and repairs and maintenance costs, and (v) occupancy and preopening rent expense, offset in part by leveraging certain general and administrative expenses.
Current report
Income from operations decreased during the thirteen weeks ended March 30, 2025 as revenue increases were exceeded by increases in various other costs compared to the same period in the prior year including (i) labor and related expenses, (ii) food and beverage costs, (iii) other restaurant operating expenses, (iv) occupancy and preopening rent expense, (v) depreciation and amortization expense and (vi) general and administrative expenses.
Current report
Other income, net increased during the thirteen weeks ended March 30, 2025 as compared to the same period in the prior year primarily due to insurance recoveries recognized during the first quarter of 2025.
Current report
Income Tax
Current report
In the United States, a restaurant company employer may claim a credit against its federal income taxes for FICA taxes paid on certain tipped wages (the “FICA tax credit”). The level of FICA tax credits is primarily driven by restaurant sales and is not impacted by costs incurred that may reduce income before provision for income taxes. The provision for income taxes decreased primarily due to the FICA tax credits, which are subject to a valuation allowance, relative to changes in pre-tax book income.
Current report
Net (Loss) Income
Current report
Restaurant level operating profit margin during the thirteen weeks ended March 30, 2025 decreased as compared to the same period in the prior year primarily due to (i) inflation across commodities and supplies, (ii) increases in restaurant-level wages, and (iii) increases in occupancy and preopening rent expenses. This was partially offset by the leverage associated with menu price.
Current report
Restaurant level operating profit for the thirteen weeks ended March 30, 2025 decreased as compared to the same period in the prior yeardue to operating expense increases, including (i) labor costs, (ii) food and beverage expenses, (iii) other restaurant operating expenses, and (iv) occupancy and preopening rent, exceeding revenue increases.
Current report
Adjusted EBITDA decreased during the thirteen weeks ended March 30, 2025 as compared to the same period in the prior year primarily due to (i) the decrease in restaurant level operating profit and (ii) the increase in general and administrative expenses including increased marketing spend.
Current report
Cash provided by financing activities includes (i) borrowing the Company’s Credit Facility to fund capital projects and related debt issuance costs, net of debt repayments and (ii) proceeds from stock option exercises.
Removed paragraphs (20)
Previous report
•Total revenues increased 14.8% to $251.6 million in the third quarter of 2024 from $219.2 million in the third quarter of 2023
Previous report
•Restaurant level operating profit margin** increased to 18.9% in the third quarter of 2024 from 18.7% in the third quarter of 2023
Previous report
•Adjusted EBITDA** increased to $25.6 million in the third quarter of 2024 from $21.6 million in the third quarter of 2023
Previous report
*Comparing the thirteen-week periods ended September 29, 2024 and October 1, 2023 in order to compare like-for-like periods. See “Key Performance Indicators” for additional information.
Previous report
As reported by Blackbox Financial Intelligence, the casual dining segment for US restaurants experienced another quarter of negative same-restaurant sales growth continuing a sustained business trend commencing prior to 2024. The Company’s same-restaurant sales growth was negative 1.9% for the third quarter, following quarters one and two when our same-restaurant sales growth was positive 0.5% and negative 0.3%, respectively.
Previous report
Commodity inflation was 3.4% in the third quarter. Management expects full year commodity inflation of approximately 3.0%.
Previous report
Restaurant-level wage inflation during the third quarter was 3.8% and full year inflation is expected to be approximately 5.0%.
Previous report
(1) Comparing the thirteen and thirty-nine-week periods ended September 29, 2024 with the thirteen and thirty-nine-week periods ended October 1, 2023 in order to compare like-for-like periods. See “Key Performance Indicators” for additional information.
Previous report
The increase in general and administrative expenses during the thirteen weeks ended September 29, 2024 as compared to the same period in the prior year was mainly due to (i) $1.3 million increase in information technology, licenses, travel and other miscellaneous expenses (ii) $0.6 million increase in compensation expense from wage increases, stock compensation and additional employee headcount to support growth and (iii) $0.6 million increase in consulting and professional services.
Previous report
The increase in general and administrative expenses during the thirty-nine weeks ended September 29, 2024 as compared to the same period in the prior year was mainly due to (i) $4.9 million increase in compensation expense from wage increases, stock compensation and additional employee headcount to support growth and (ii) $4.5 million increase in consulting and professional services, information technology, licenses, travel and other expenses.
Previous report
The decrease in Transaction expenses, net during the thirteen-week period ended September 29, 2024 as compared to the same period in the prior year was primarily due to decrease in costs incurred in connection with the acquisition of franchise-owned restaurants.
Previous report
Income from operations margin decreased during the thirteen and thirty-nine weeks ended September 29, 2024 as compared to the same periods in the prior year primarily due to (i) deleveraging of certain expenses, including occupancy expenses, as a result of a decline in same restaurant sales and (ii) higher depreciation and amortization expense driven by our restaurant growth and acquisition of certain franchise-owned restaurants partially offset by (i) labor efficiency and (ii) food and beverage costs improving as a percent of sales.
Previous report
The thirty-nine week period ended September 29, 2024 includes $0.4 million of debt refinancing charges. Differences in Other income for the comparative periods presented are related to fluctuations in insurance recoveries and interest income.
Previous report
Income Tax Expense
Previous report
Net Income
Previous report
Restaurant level operating profit margin during the thirteen and thirty-nine weeks ended September 29, 2024 increased as compared to the same periods in the prior year primarily due to (i) favorable labor and other related expenses as a percent of sales, (ii) favorable food and beverage costs as a percent of sales and (iii) restaurants acquired between September 24, 2023 and September 29, 2024. This was partially offset by the deleverage of occupancy expenses.
Previous report
Restaurant level operating profit for the thirteen and thirty-nine week periods ended September 29, 2024 increased as compared to the same period in the prior year primarily due to (i) sales growth driven by the increase in menu prices, as well as (ii) restaurant sales contributed by 37 NROs and 28 restaurants acquired from franchisees between September 24, 2023 and September 29, 2024. This was partially offset by an increase in (i) food, labor and other restaurant operating expenses and (ii) deleverage of occupancy expenses.
Previous report
Adjusted EBITDA increased during the thirteen and thirty-nine weeks ended September 29, 2024 as compared to the same periods in the prior year primarily due to the increase in restaurant level operating profit. This was partially offset by general and administrative expenses mainly due to wage increases and additional employee headcount to support growth.
Previous report
(5) 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.
Previous report
Cash provided by (used in) financing activities reflects borrowings from the Company’s Credit Facility to fund strategic acquisitions of franchise-operated restaurants.
Reworded paragraphs (51)
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited interim consolidated financial statements and notes thereto included in Part I, Item 1 of this Form 10-Q and our audited consolidated financial statements and notes included in our 2023 Form 10-K. As discussed in “Cautionary Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results may materially differ from those discussed in such forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those identified in our 2023 Form 10-K, including under “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in “Part II, Item 1A. Risk Factors” of this Form 10-Q.
Current wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited interim consolidated financial statements and notes thereto included in Part I, Item 1 of this Form 10-Q and our audited consolidated financial statements and notes included in our 2024 Form 10-K. As discussed in the “Cautionary Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results may materially differ from those discussed in such forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those identified in our 2024 Form 10-K, including under “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in “Part II, Item 1A. Risk Factors” of this Form 10-Q.
Previous wording
First Watch is an award-winning Daytime Dining concept serving made-to-order breakfast, brunch and lunch using fresh ingredients. 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. For three consecutive years, First Watch was named a Top 100 Most Loved Workplace® by Newsweek and the Best Practice Institute, including being named the #1 Most Loved Workplace in 2024. On October 1, 2021, the Company’s common stock began trading on Nasdaq under the ticker symbol “FWRG.”
Current wording
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. For three consecutive years, First Watch was named a Top 100 Most Loved Workplace® by Newsweek and the Best Practice Institute, and in 2024, was named the #1 Most Loved Workplace.
Previous wording
The Company operates and franchises restaurants in 29 states under the “First Watch” trade name and as of September 29, 2024, the Company had 466 company-owned restaurants and 81 franchise-owned restaurants.
Current wording
The Company oper ates and franchises restaurants in 30 states under the “First Watch” trade name and as of March 30, 2025, the Company had 498 company-owned restaurants and 86 franchise-owned restaurants.
Previous wording
Financial highlights for the thirteen weeks ended September 29, 2024 (“third quarter of 2024”) as compared, unless otherwise indicated below, to the thirteen weeks ended September 24, 2023 (“third quarter of 2023”), reflected the continued momentum of our strong operating performance and include the following:
Current wording
Financial highlights for the thirteen weeks ended March 30, 2025 (“first quarter of 2025”) as compared, unless otherwise indicated below, to the thirteen weeks ended March 31, 2024 (“first quarter of 2024”), reflected the continued momentum of our operating performance and include the following:
Previous wording
•Opened 9 system-wide restaurants in 8 states, resulting in a total of 547 system-wide restaurants (466 company-owned and 81 franchise-owned) across 29 states
Current wording
•Opened 13 system-wide restaurants in 10 states, resulting in a total of 584 system-wide restaurants (498 company-owned and 86 franchise-owned) across 30 states
Previous wording
•System-wide sales increased 8.0% to $291.8 million in the third quarter of 2024 from $270.3 million in the third quarter of 2023
Current wording
•System-wide sales increased 11.5% to $323.0 millionin the first quarter of 2025 from $289.6 million in the first quarter of 2024
Previous wording
•Same-restaurant sales growth of negative 1.9%*
Current wording
•Same-restaurant sales growth of 0.7%
Previous wording
•Income from operations margin decreased to 2.5% during the third quarter of 2024 from 3.6% in the third quarter of 2023
Current wording
•Income from operations margin decreased to 0.4% during the first quarter of 2025 from 5.1% in the first quarter of 2024
Previous wording
•Net income decreased to $2.1 million, or $0.03 per diluted share, in the third quarter of 2024 from $5.4 million, or $0.09 per diluted share in the third quarter of 2023
Current wording
•Net loss of$(0.8) million, or$(0.01) per diluted share, in the first quarter of 2025 from net income of $7.2 million, or $0.12 per diluted share in the first quarter of 2024
Previous wording
•Same-restaurant traffic growth of negative 4.4%*
Current wording
In the first quarter, we experienced same-restaurant traffic growth of negative 0.7%. Though remaining somewhat challenged in the near-term due to the dynamic macroenvironment, we expect traffic to improve in the second half of the year when we anticipate benefiting from the results of increased focused marketing initiatives. Commodity inflation was 7.7% in the first quarter of 2025, largely driven by four of our top five commodities: eggs, coffee, bacon and avocados. We expect commodity inflation to remain in the high single-digit percentage range for the balance of the year based on current market conditions. We estimate that the tariffs enacted in April 2025 will increase our food and beverage costs as a percentage of restaurant sales by approximately 0.1% and supplies costs as a percentage of restaurant sales by approximately 0.2% for 2025.
Previous wording
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”). For the third quarter of 2024, this operating metric compares the thirteen and thirty-nine-week periods ended September 29, 2024 with the thirteen and thirty-nine-week periods ended October 1, 2023, versus the thirteen and thirty-nine-week periods ended September 24, 2023, in order to compare like-for-like periods. For the thirteen and thirty-nine weeks ended September 29, 2024 and October 1, 2023, there were 344 restaurants and 327 restaurants, respectively, in our Comparable Restaurant Base. Measuring our same-restaurant sales growth allows management to evaluate the performance of our existing restaurant base. 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.
Current wording
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”). For the thirteen weeks ended March 30, 2025 and March 31, 2024, there were 383 restaurants and 344 restaurants, respectively, in our Comparable Restaurant Base. Measuring our same-restaurant sales growth allows management to evaluate the performance of our existing restaurant base. 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.
Previous wording
Same-Restaurant Traffic Growth: the percentage change in traffic counts for the thirteen and thirty-nine-week periods ended September 29, 2024 as compared to the thirteen and thirty-nine-week periods ended October 1, 2023 using the Comparable Restaurant Base, in order to compare like-for-like periods. Measuring our same-restaurant traffic growth allows management to evaluate the performance of our existing restaurant base. We believe this measure is useful for investors because an increase in same-restaurant traffic provides an indicator as to the development of our brand and the effectiveness of our marketing strategy.
Current wording
Same-Restaurant Traffic Growth: the percentage change in traffic counts as compared to the same period in the prior year using the Comparable Restaurant Base. Measuring our same-restaurant traffic growth allows management to evaluate the performance of our existing restaurant base. We believe this measure is useful for investors because an increase in same-restaurant traffic provides an indicator as to the development of our brand and the effectiveness of our marketing strategy.
Previous wording
To supplement the consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), we use the following non-GAAP measures, which present operating results on an adjusted basis: (i) Adjusted EBITDA, (ii) Adjusted EBITDA margin, (iii) Restaurant level operating profit and (iv) Restaurant level operating profit margin. Our presentation of these non-GAAP measures includes isolating the effects of some items that are either nonrecurring in nature or vary from period to period without any correlation to our ongoing core operating performance. These supplemental measures of performance are not required by or presented in accordance with GAAP. Management believes these non-GAAP measures provide investors with additional visibility into our operations, facilitate analysis and comparisons of our ongoing business operations because they exclude items that may not be indicative of our ongoing operating performance, help to identify operational trends and allow for greater transparency with respect to key metrics used by management in our financial and operational decision making. Our non-GAAP measures may not be comparable to similarly titled measures used by other companies and have important limitations as analytical tools. These non-GAAP measures should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP as they may not provide a complete understanding of our performance. These non-GAAP measures should be reviewed in conjunction with our consolidated financial statements prepared in accordance with GAAP.
Current wording
To supplement the consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), we use the following non-GAAP measures, which present operating results on an adjusted basis: (i) Adjusted EBITDA, (ii) Adjusted EBITDA margin, (iii) Restaurant level operating profit and (iv) Restaurant level operating profit margin. Our presentation of these non-GAAP measures includes isolating the effects of some items that are either nonrecurring in nature or have no meaningful correlation to our ongoing core operating performance. These supplemental measures of performance are not required by or presented in accordance with GAAP. Management believes these non-GAAP measures provide investors with additional visibility into our operations, facilitate analysis and comparisons of our ongoing business operations because they exclude items that may not be indicative of our ongoing operating performance, help to identify operational trends and allow for greater transparency with respect to key metrics used by Management in our financial and operational decision making. Our non-GAAP measures may not be comparable to similarly titled measures used by other companies and have important limitations as analytical tools. These non-GAAP measures should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP as they may not provide a complete understanding of our performance. These non-GAAP measures should be reviewed in conjunction with our consolidated financial statements prepared in accordance with GAAP.
Previous wording
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.
Current wording
Adjusted EBITDA: represents Net income (loss) 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 (loss), the most directly comparable measure in accordance with GAAP, to Adjusted EBITDA, included in the section Non-GAAP Financial Measure Reconciliations below.
Previous wording
Adjusted EBITDA Margin: represents Adjusted EBITDA as a percentage of total revenues. See Non-GAAP Financial Measure Reconciliations below for a reconciliation to Net income margin, the most directly comparable GAAP measure.
Current wording
Adjusted EBITDA Margin: represents Adjusted EBITDA as a percentage of total revenues. See Non-GAAP Financial Measure Reconciliations below for a reconciliation to Net income (loss) margin, the most directly comparable GAAP measure.
Previous wording
(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 Measures Reconciliations section below.
Current wording
(2) Reconciliations from Net income (loss) and Net income (loss) margin, the most comparable GAAP measures, to Adjusted EBITDA and Adjusted EBITDA margin, are set forth in the schedules within the Non-GAAP Financial Measures Reconciliations section below.
Previous wording
The following table summarizes our results of operations and the percentages of certain items in relation to Total revenues or, where indicated, Restaurant sales for the thirteen and thirty-nine weeks ended September 29, 2024 and September 24, 2023:
Current wording
The following table summarizes our results of operations and the percentages of certain items in relation to Total revenues or, where indicated, Restaurant sales for the thirteen weeks ended March 30, 2025 and March 31, 2024:
Previous wording
The increase in total restaurant sales as compared to the same periods in the prior year was due principally to restaurant sales of (i) $18.1 million and $43.1 million for the thirteen and thirty-nine weeks ended September 29, 2024, respectively, from 37 NROs opened between September 24, 2023 and September 29, 2024, (ii) $14.9 million and $31.9 million for the thirteen and thirty-nine weeks ended September 29, 2024, respectively, from 28 restaurants acquired from franchisees between September 24, 2023 and September 29, 2024 and (iii) menu price increases.
Current wording
The increase in total restaurant sales as compared to the same period in the prior year was due principally to restaurant sales of(i) $25.6 million for the thirteen weeks ended March 30, 2025 from 46 NROs opened between March 31, 2024 and March 30, 2025, (ii) $10.5 million from 21 restaurants acquired from franchisees between March 31, 2024 and March 30, 2025, (iii) menu price increases, partially offset by a decrease in same-restaurant traffic and increased promotional usage.
Previous wording
The decrease in franchise revenues during the thirteen and thirty-nine weeks ended September 29, 2024 as compared to the same periods in the prior year was primarily driven by the Company’s acquisitions of 28 franchise-owned restaurants, partially offset by franchise revenues from the 7 franchise-owned NROs between September 24, 2023 and September 29, 2024.
Current wording
The decrease infranchise revenues during the thirteen weeks ended March 30, 2025 as compared to the same period in the prior year was primarily driven by the Company’s acquisitions of 21 franchise-owned restaurants, partially offset by franchise revenues from the 8 franchise-owned NROs between March 31, 2024 and March 30, 2025.
Previous wording
Food and beverage costs as a percent of restaurant sales decreased during the thirteen and thirty-nine weeks ended September 29, 2024 as compared to the same periods in the prior year primarily due to the leverage associated with menu price increases partially offset by commodity inflation.
Current wording
Food and beverage costs as a percent of restaurant sales increased during the thirteen weeks ended March 30, 2025 as compared to the same period in the prior year primarily due to (i)commodity inflation largely driven by four of our top five commodities: eggs, coffee, bacon and avocados, and (ii) increased portion size of meat in certain menu items, partially offset by the leverage associated with menu price increases.
Previous wording
Food and beverage costs increased during the thirteen and thirty-nine weeks ended September 29, 2024 as compared to the same periods in the prior year primarily as a result of the 37 NROs and 28 restaurants acquired from franchisees between September 24, 2023 and September 29, 2024.
Current wording
Food and beverage costs increased during the thirteen weeks ended March 30, 2025 as compared to the same period in the prior year primarily as a result (i) the 46 NROs and 21 restaurants acquired from franchisees between March 31, 2024 and March 30, 2025, (ii)commodity inflation and (iii) increased portion size of meat in certain menu items.
Previous wording
Labor and other related expenses as a percentage of restaurant sales decreased during the thirteen weeks ended September 29, 2024 as compared to the same period in the prior year primarily as a result of (i) the leverage associated with menu price increases, and (ii) hourly labor efficiency. These decreases were partially offset by wage increases.
Current wording
Labor and other related expenses as a percentage of restaurant sales increased during the thirteen weeks ended March 30, 2025 as compared to the same period in the prior year primarily as a result of increases in (i) wage rates and (ii) health insurance costs, partially offset by the leverage associated with menu price increases.
Previous wording
The increase in labor and other related expenses during the thirteen and thirty-nine weeks ended September 29, 2024 as compared to the same periods in the prior year was primarily due to (i) the increase in the number of restaurants and (ii) wage increases.
Current wording
The increase in labor and other related expenses during the thirteen weeks ended March 30, 2025 as compared to the same period in the prior year was primarily due to (i) the increase in the number of restaurants and related headcount, (ii) wage increases and (iii) increased health insurance costs.
Previous wording
The increase in other restaurant operating expenses during the thirteen and thirty-nine weeks ended September 29, 2024 as compared to the same periods in the prior year was mainly due to the increase in the number of restaurants and restaurant sales.
Current wording
As a percentage of restaurant sales, the increase in other restaurant operating expenses for the thirteen weeks ended March 30, 2025 as compared to the same period in the prior year was primarily due to (i) utilities expenses, (ii) operating supply costs, in particular, to-go supplies, (iii) repairs and maintenance, (iv) third-party delivery fees and (v) restaurant-level marketing costs.
Previous wording
As a percentage of restaurant sales, the increase in occupancy expenses for the thirteen and thirty-nine weeks ended September 29, 2024 as compared to the same periods in the prior year was primarily due to higher rent expense and the deleverage associated with negative same restaurant sales growth.
Current wording
As a percentage of restaurant sales, the increase in occupancy expenses for the thirteen weeks ended March 30, 2025 as compared to the same period in the prior year was primarily due to higher rent expense associated with newer restaurants.
Previous wording
The increase in occupancy expenses during the thirteen weeks and thirty-nine weeks ended September 29, 2024 as compared to the same periods in the prior year was primarily due to the increase in the number of company-owned restaurants.
Current wording
The increase in occupancy expenses during the thirteen weeks ended March 30, 2025 as compared to the same period in the prior year was primarily due to the increase in the number of company-owned restaurants.
Previous wording
Pre-opening expenses are costs incurred to open new company-owned restaurants. Pre-opening expenses include pre-opening rent expense, which is recognized during the period between the date of possession of the restaurant facility and the restaurant opening date. In addition, pre-opening expenses include manager salaries, recruiting expenses, employee payroll and training costs, which are recognized in the period in which the expense was incurred. Pre-opening expenses can fluctuate from period to period, based on the number and timing of new company-owned restaurant openings.
Current wording
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, which are recognized in the period in which the expense was incurred. Pre-opening expenses can fluctuate from period to period, based on the number and timing of new company-owned restaurant openings.
Previous wording
The increase in pre-opening expenses during the thirteen and thirty-nine weeks ended September 29, 2024 as compared to the same periods in the prior year was primarily from (i) increases in rent and (ii) the number of restaurants opened and under construction.
Current wording
The increase in pre-opening expenses during the thirteen weeks ended March 30, 2025 as compared to the same period in the prior year was primarily from (i) increases in pre-opening rent and (ii) the higher number of restaurants opened and under construction.
Previous wording
The increase in depreciation and amortization during the thirteen and thirty-nine weeks ended September 29, 2024 as compared to the same periods in the prior year was due to additional NRO assets and restaurants acquired, including reacquired rights from franchisees.
Current wording
The increase in depreciation and amortization during the thirteen weeks ended March 30, 2025 as compared to the same period in the prior year is primarily related to depreciating and amortizing the assets of NROs and of acquired restaurants, including reacquired rights from franchisees .
Previous wording
Transaction expenses, net include (i) revaluations of contingent consideration payable to previous stockholders for tax savings generated through the use of federal and state loss carryforwards and general business credits that had been accumulated from operations prior to our acquisition by Advent in August 2017, (ii) gains or losses associated with lease or contract terminations, (iii) costs incurred in connection with the acquisition of franchise-owned restaurants, (iv) costs related to restaurant closures and (v) costs related to certain equity offerings.
Current wording
Transaction expenses, net include (i) costs incurred in connection with the acquisition of franchise-owned restaurants, (ii) costs related to certain equity offerings, (iii) costs related to restaurant closures, (iv) gains or losses associated with lease or contract terminations and (v) revaluations of contingent consideration payable to previous stockholders for tax savings generated through the use of federal and state loss carryforwards and general business credits that had been accumulated from operations prior to August 2017.
Previous wording
The decrease in Transaction expenses, net during the thirty-nine weeks ended September 29, 2024 as compared to the same period in the prior year was primarily due to a contingent consideration liability reduction recognized as a reduction in transaction expenses in the first quarter of 2024.
Current wording
The increase in Transaction expenses, net during the thirteen weeks ended March 30, 2025 as compared to the same period in the prior year was primarily due to recording a $0.6 million reduction tocontingent consideration liability in the first quarter of 2024 offset in part by $0.3 million of debt modification costs incurred in the first quarter of 2024.
Previous wording
The increase in interest expense during the thirteen and thirty-nine weeks ended September 29, 2024 as compared to the same periods in the prior year was due to (i) increased borrowings associated with franchise acquisitions and (ii) higher interest rates.
Current wording
The increase in interest expense during the thirteen weeks ended March 30, 2025 as compared to the same period in the prior year was due to (i) increased borrowings associated with franchise acquisitions and (ii) higher interest rates.
Previous wording
Income tax expense primarily consists of various federal and state taxes.
Current wording
Income tax benefit (expense) primarily consists of various federal and state taxes.
Previous wording
The change in the effective income tax rates for the thirteen and thirty-nine weeks ended September 29, 2024 as compared to the same periods in the prior year was primarily due to (i) the change in the valuation allowance on deferred tax assets, (ii) the benefit of tax credits for FICA taxes on certain employees’ tips and (iii) the impacts of executive stock-based compensation.
Current wording
The change in the effective income tax rates for the thirteen weeks ended March 30, 2025 as compared to the same period in the prior year was primarily due to the change in pre-tax book income relative to the FICA tax credit and valuation allowance.
Previous wording
Net income and net income margin during the thirteen and thirty-nine weeks ended September 29, 2024 decreased as compared to the same periods in the prior year primarily due to the (i) increase in interest expense associated with increased borrowings to fund acquisitions and higher interest rates, (ii) the increase in income tax expense and (iii) the decrease in income from operations margin.
Current wording
Net (loss) income and net (loss) income margin during the thirteen weeks ended March 30, 2025 decreased as compared to the same period in the prior year primarily due to the(i) decrease in income from operations as expenses increased at ahigher rate than revenue and (ii) increase in interest expense associated with increased borrowings to fund acquisitions, offset partially by the impact of income taxes.
Previous wording
Adjusted EBITDA margin increased during the thirteen and thirty-nine weeks ended September 29, 2024 compared to the same periods in the prior year primarily due to an increase in (i) restaurant level operating profit margin and (ii) general and administrative expenses growing at a slower rate than total revenue.
Current wording
Adjusted EBITDA margin decreased during the thirteen weeks ended March 30, 2025 compared to the same period in the prior year primarily due to a decrease in restaurant level operating profit margin partially offset by leveraging of general and administrative expenses.
Previous wording
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 for the periods indicated:
Current wording
Adjusted EBITDA and Adjusted EBITDA margin - The following table reconciles Net income (loss) and Net income (loss) margin, the most directly comparable GAAP measures to Adjusted EBITDA and Adjusted EBITDA margin for the periods indicated:
Previous wording
(1) 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.
Current wording
(1) 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 (Loss).
Previous wording
(2) Represents non-cash, stock-based compensation expense which is recorded within General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income.
Current wording
(2) 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).
Previous wording
(3) Represents professional service costs incurred in connection with the Delaware Voluntary Disclosure Agreement Program related to unclaimed or abandoned property. These costs are recorded in General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income.
Current wording
(3) Represents professional service costs incurred in connection with the Delaware Voluntary Disclosure Agreement Program related to unclaimed or abandoned property. These costs are recorded in General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income (Loss).
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