First Watch Restaurant Group, Inc.

Previous 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.

Current wording

The Company oper ates and franchises restaurants in 31 states under the “First Watch” trade name and as of June 29, 2025, the Company had 531 company-owned restaurants and 69 franchise-owned restaurants.

Previous 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:

Current wording

Financial highlights for the thirteen weeks ended June 29, 2025 (“second quarter of 2025”) as compared, unless otherwise indicated below, to the thirteen weeks ended June 30, 2024 (“second quarter of 2024”), reflected the continued momentum of our operating performance and include the following:

Previous 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

Current wording

•Opened 17 system-wide restaurants in 8 states, with 1 planned closure, resulting in a total of 600 system-wide restaurants (531 company-owned and 69 franchise-owned) across 31 states

Previous 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

Current wording

•System-wide sales increased 15.8% to $346.2 millionin the second quarter of 2025 from $299.0 million in the second quarter of 2024

Previous wording

•Same-restaurant sales growth of 0.7%

Current wording

•Same-restaurant sales growth of 3.5%

Previous 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.

Current wording

•Same-restaurant traffic growth of 2.0%

Previous wording

•Income from operations margin decreased to 0.4% during the first quarter of 2025 from 5.1% in the first quarter of 2024

Current wording

•Income from operations margin decreased to 2.4% during the second quarter of 2025 from 6.4% in the second quarter of 2024

Previous wording

•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 wording

•Restaurant level operating profit margin* decreased to 18.6% in the second quarter of 2025 from 21.9% in the second quarter of 2024

Previous 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

Current wording

•Net income decreased to$2.1 million, or$0.03 per diluted share, in the second quarter of 2025 from net income of $8.9 million, or $0.14 per diluted share, in the second quarter of 2024

Previous wording

•Adjusted EBITDA*decreased to$22.8 million in the first quarter of 2025 from $28.6 million in the first quarter of 2024

Current wording

•Adjusted EBITDA*decreased to$30.4 million in the second quarter of 2025 from $35.3 million in the second quarter of 2024

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 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.

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 and twenty-six weeks ended June 29, 2025 and June 30, 2024, there were 382 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

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.

Current 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.

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 (loss) 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 margin, the most directly comparable GAAP measure.

Previous 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.

Current wording

(2) 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.

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 weeks ended March 30, 2025 and March 31, 2024:

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 and twenty-six weeks ended June 29, 2025 and June 30, 2024, respectively:

Previous 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.

Current 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) $30.1 million and $52.7 million for thethirteen and twenty-six weeks ended June 29, 2025, respectively, from 55 NROs opened between June 30, 2024 and June 29, 2025, (ii) $7.0 million from 19 restaurants acquired from franchisees between June 30, 2024 and June 29, 2025, (iii) menu price increases and (iv) an increase in same-restaurant traffic, partially offset by increased promotional usage.

Previous 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.

Current wording

The decrease infranchise revenues during thethirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods in the prior year was primarily driven by the Company’s acquisitions of 19 franchise-owned restaurants, partially offset by franchise revenues from the nine franchise-owned NROs between June 30, 2024 and June 29, 2025.

Previous 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.

Current wording

Food and beverage costs as a percent of restaurant sales increased during the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods in the prior year primarily due to (i) commodity inflation experienced in eggs, coffee, bacon and avocados, and (ii) increased portion size in certain menu items, partially offset by the leverage associated with menu price increases.

Previous 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.

Current wording

Food and beverage costs increased during the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods in the prior year primarily as a result of (i) the 55 NROs and 19 restaurants acquired from franchisees between June 30, 2024 and June 29, 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 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.

Current wording

Labor and other related expenses as a percentage of restaurant sales increased during the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods 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 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.

Current wording

The increase in labor and other related expenses during the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods 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

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.

Current wording

As a percentage of restaurant sales, the increase in other restaurant operating expenses for the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods in the prior year was primarily due to (i) utilities expenses, (ii) operating supply costs, in particular, to-go supplies and (iii) third-party delivery fees.

Previous wording

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 wording

The increase in other restaurant operating expenses during thethirteen weeks ended June 29, 2025 as compared to the same period in the prior year was primarily due to the increase in the number of restaurants driving increased expenses including(i) $3.1 million in operating supplies, (ii) $2.2 million related to utilities and repair and maintenance expenses, (iii) $2.0 million in third-party delivery fees, (iv) $0.7 million in credit card fees and (v) $0.4 million in insurance expenses.

Previous 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.

Current wording

As a percentage of restaurant sales, the increase in occupancy expenses for the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods 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 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.

Current wording

The increase in occupancy expenses during the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods in the prior year was primarily due to the increase in the number of company-owned restaurants.

Previous 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.

Current wording

The increase in pre-opening expenses during the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods in the prior year was primarily from (i) increases in pre-opening rent and (ii) the higher number of new restaurants opened and under construction.

Previous wording

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 wording

The increase in general and administrative expenses during the thirteen weeks ended June 29, 2025 as compared to the same period in the prior year was mainly due to (i)$2.8 million increase in marketing expenses, (ii) $1.9 million in compensation expense from wage increases and additional employee headcount to support growth, (iii) a $0.5 million increase in licenses and fees including information technology related expenses for an increased number of restaurants and (iv) a $0.8 million increase in consulting and other professional services fees.

Previous 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 .

Current wording

The increase in depreciation and amortization during the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods 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

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.

Current wording

The increase in Transaction expenses, net during the twenty-six weeks ended June 29, 2025 as compared to the same period in the prior year was primarily due to (i) $0.1 million increased costs incurred in connection with the acquisitions of restaurants from our franchisees and (ii) a $0.6 million reduction to contingent consideration liability in the first quarter of 2024, partially offset by $0.3 million of debt modification costs incurred in the first quarter of 2024.

Previous wording

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 wording

Income from operations margin decreased during the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods 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 expenses including health insurance, (iii) occupancy and preopening rent expense, (iv) other restaurant operating expenses and (v) depreciation and amortization expense driven by restaurant growth, offset in part by leveraging certain general and administrative expenses.

Previous wording

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 wording

Income from operations decreased during the thirteen and twenty-six weeks ended June 29, 2025 as revenue increases were exceeded by increases in various other costs compared to the same periods 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) general and administrative expenses and (vi) depreciation and amortization expense.

Previous 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.

Current wording

The increase in interest expense during the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods in the prior year was primarily due toincreased borrowings associated with franchise acquisitions.

Previous wording

Income tax benefit (expense) primarily consists of various federal and state taxes.

Current wording

Income tax expense primarily consists of various federal and state taxes.

Previous wording

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 wording

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 (“FICA tax credits”). The level of FICA tax credits is primarily driven by restaurant sales.

Previous 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.

Current wording

The effective income tax rates during the thirteen and twenty-six weeks ended June 29, 2025 increased as compared to the same periods in the prior year was primarily due to (i) the benefit of FICA tax credits and (ii) the change in valuation allowance.

Previous 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.

Current wording

Net income and net income margin during the thirteen and twenty-six weeks ended June 29, 2025 decreased as compared to the same periods 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

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 wording

Restaurant level operating profit margin during thethirteen and twenty-six weeks ended June 29, 2025 decreased as compared to the same periods in the prior year primarily due to (i) inflation across commodities, (ii) increases in restaurant-level wages, (iii) increases in occupancy expense and (iv) increases in preopening expenses. This was partially offset by the leverage associated with menu price.

Previous wording

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 wording

Restaurant level operating profit for the thirteen and twenty-six weeks ended June 29, 2025 decreased as compared to the same periods in the prior yeardue to operating expense increases, including (i) labor costs, (ii) food and beverage expenses, (iii) other restaurant operating expenses, (iv) occupancy expense and (v) preopening expenses.

Previous 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.

Current wording

Adjusted EBITDA margin decreased during the thirteen and twenty-six weeks ended June 29, 2025 compared to the same periods 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 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 wording

Adjusted EBITDA decreased during the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods in the prior year primarily due to (i) the decrease in restaurant level operating profit and (ii) the increase in general and administrative expenses.