First Watch Restaurant Group, Inc.

Previous 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.

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 four consecutive years, First Watch was named a Top 100 Most Loved Workplace® by Newsweek and the Best Practice Institute, and in 2025, was named the #1 Most Loved Workplace for the second year in a row.

Previous 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.

Current wording

The Company operates and franchises restaurants in 32 states under the “First Watch” trade name and as of September 28, 2025, the Company had 548 company-owned restaurants and 72 franchise-owned restaurants.

Previous 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:

Current wording

Financial highlights for the thirteen weeks ended September 28, 2025 (“third quarter of 2025”) as compared, unless otherwise indicated below, to the thirteen weeks ended September 29, 2024 (“third quarter of 2024”), reflected the continued momentum of our operating performance and include the following:

Previous 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

Current wording

•Opened 21 system-wide restaurants in 14 states, with 1 planned closure, resulting in a total of 620 system-wide restaurants (548 company-owned and 72 franchise-owned) across 32 states

Previous 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

Current wording

•System-wide sales increased 20.9% to $352.7 million in the third quarter of 2025 from $291.8 million in the third quarter of 2024

Previous wording

•Same-restaurant sales growth of 3.5%

Current wording

•Same-restaurant sales growth of 7.1%

Previous wording

•Same-restaurant traffic growth of 2.0%

Current wording

•Same-restaurant traffic growth of 2.6%

Previous 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

Current wording

•Net income increased to $3.0 million, or $0.05 per diluted share, in the third quarter of 2025 from net income of $2.1 million, or $0.03 per diluted share, in the third quarter of 2024

Previous wording

In the second quarter, the Company’s same-restaurant traffic grew 2.0%, our first quarter of positive traffic growth since the first quarter ended March 26, 2023. We expect positive traffic trends to continue through the second half of the year.

Current wording

In the third quarter of 2025, the Company’s same-restaurant traffic grew 2.6%, marking two consecutive quarters of positive traffic growth. We expect positive traffic trends to continue through the end of the year.

Previous wording

Restaurant-level wage inflation during the second quarter was 3.9% and full year inflation is expected to approximate 3% to 4%.

Current wording

Restaurant-level wage inflation during the third quarter was 3.6% and full year inflation is expected to be approximately 4%.

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 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.

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 thirty-nine weeks ended September 28, 2025 and September 29, 2024, there were 381 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

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.

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 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

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:

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 thirty-nine weeks ended September 28, 2025 and September 29, 2024, respectively:

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) $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.

Current wording

The increase in total restaurant sales as compared to the same periods in the prior year was due principally to (i) the increase in number of restaurants due to NROs, (ii) restaurants acquired from franchisees, (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 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.

Current wording

The decrease in franchise revenues during the thirteen and thirty-nine weeks ended September 28, 2025 as compared to the same periods in the prior year was primarily driven by the Company’s acquisitions of franchise-owned restaurants, partially offset by franchise revenues from the franchise-owned NROs.

Previous wording

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.

Current wording

Food and beverage costs at company-owned restaurants vary with sales volume and are subject to increases and declines in commodity costs.

Previous 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.

Current wording

Food and beverage costs as a percent of restaurant sales increased during the thirty-nine weeks ended September 28, 2025 as compared to the same period 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 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.

Current wording

Food and beverage costs increased during the thirteen and thirty-nine weeks ended September 28, 2025 as compared to the same periods in the prior year primarily as a result of (i) the increase in the number of company-owned restaurants, (ii) commodity inflation and (iii) increased portion size of meat in certain menu items.

Previous wording

Labor and other related expenses are variable by nature and 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 increased competition for qualified staff.

Current wording

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 increased competition for qualified staff.

Previous 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.

Current wording

Labor and other related expenses as a percentage of restaurant sales increased during the thirty-nine weeks ended September 28, 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 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.

Current wording

The increase in labor and other related expenses during the thirteen and thirty-nine weeks ended September 28, 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 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.

Current wording

As a percentage of restaurant sales, the increase in other restaurant operating expenses for the thirteen and thirty-nine weeks ended September 28, 2025 as compared to the same periods in the prior year was primarily due to increases in (i) operating supply costs, in particular, menus and to-go supplies and (ii) third-party delivery fees.

Previous 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.

Current wording

The increase in other restaurant operating expenses during the thirteen weeks ended September 28, 2025 as compared to the same period in the prior year was primarily due to the increase in the number of company-owned restaurants driving increased expenses, including (i) $3.6 million in operating supplies, (ii) $3.0 million related to utilities and repair and maintenance expenses, (iii) $3.2 million in third-party delivery fees and (iv) $1.4 million in credit card fees.

Previous wording

The increase in other restaurant operating expenses during the twenty-six 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) $5.3 million in operating supplies, (ii) $4.6 million related to utilities and repair and maintenance expenses, (iii) $3.1 million in third-party delivery fees, (iv) $1.6 million in credit card fees, (v) $0.8 million in insurance expenses, (vi) $0.5 million in legal, accounting, and licensing fees and (vii) $0.5 million related to restaurant marketing.

Current wording

The increase in other restaurant operating expenses during the thirty-nine weeks ended September 28, 2025 as compared to the same period in the prior year was primarily due to the increase in the number of company-owned restaurants driving increased expenses, including (i) $8.8 million in operating supplies, (ii) $7.7 million related to utilities, repair and maintenance expenses, (iii) $6.3 million in third-party delivery fees, (iv) $3.0 million in credit card fees, (v) $1.0 million in insurance expenses and (vi) $0.7 million in legal, accounting and licensing fees.

Previous 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.

Current wording

As a percentage of restaurant sales, the decrease in occupancy expenses for the thirteen weeks ended September 28, 2025 as compared to the same period in the prior year was primarily due to leveraging increased restaurant sales.

Previous 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.

Current wording

The increase in occupancy expenses during the thirteen and thirty-nine weeks ended September 28, 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 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.

Current wording

The increase in pre-opening expenses during the thirteen and thirty-nine weeks ended September 28, 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 twenty-six weeks ended June 29, 2025 as compared to the same period in the prior year was mainly due to (i) $4.5 million increase in marketing expenses, (ii) $2.0 million in compensation expense from wage increases and additional employee headcount to support growth, (iii) a $1.0 million increase in licenses and fees including information technology related expenses for an increased number of restaurants and (iv) a $0.9 million increase in consulting and other professional services fees.

Current wording

The increase in general and administrative expenses during the thirteen weeks ended September 28, 2025 as compared to the same period in the prior year was mainly due to (i) a $2.9 million increase in marketing expenses, (ii) a $2.4 million increase in compensation expense from wage increases and additional employee headcount to support growth and (iii) a $0.5 million increase in licenses and fees including information technology related expenses for an increased number of restaurants.

Previous 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.

Current wording

The increase in general and administrative expenses during the thirty-nine weeks ended September 28, 2025 as compared to the same period in the prior year was mainly due to, (i) a $7.4 million increase in marketing expenses, (ii) a $4.4 million increase in compensation expense from wage increases and additional employee headcount to support growth, (iii) a $1.5 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 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.

Current wording

The increase in depreciation and amortization during the thirteen and thirty-nine weeks ended September 28, 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 thethirteen weeks ended June 29, 2025 as compared to the same period in the prior year was primarily due to $0.1 million increased costs incurred in connection with the acquisitions of restaurants from our franchisees.

Current wording

The increase in Transaction expenses, net during the thirteen weeks ended September 28, 2025 as compared to the same period in the prior year was primarily due to $0.3 million on costs incurred in connection with a secondary equity offering. This increase was partially offset by $(0.2) million decrease in costs in connection with the acquisitions of restaurants from our franchisees.

Previous 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.

Current wording

The increase in Transaction expenses, net during the thirty-nine weeks ended September 28, 2025 as compared to the same period in the prior year was primarily due to 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 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.

Current wording

Income from operations and income from operations margin decreased during the thirty-nine weeks ended September 28, 2025 as revenue increases were exceeded by increases in various other costs compared to the same period in the prior year including (i) food and beverage costs, (ii) labor and related expenses, (iii) other restaurant operating expenses, (iv) preopening expenses and (v) depreciation and amortization expense, partially offset by leveraging of general and administrative expenses.

Previous 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.

Current wording

The increase in interest expense during the thirteen and thirty-nine weeks ended September 28, 2025 as compared to the same periods in the prior year was primarily due to increased borrowings associated with franchise acquisitions.

Previous wording

Other income, net 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 a reduction in interest income partially offset by insurance recoveries.

Current wording

Other income, net decreased during the thirteen and thirty-nine weeks ended September 28, 2025 as compared to the same periods in the prior year primarily due to a reduction in interest income partially offset by insurance recoveries.

Previous wording

Income tax expense 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 (i) the decrease in income before taxes, (ii) the benefit of FICA tax credits and (iii) the change in the valuation allowance.

Current wording

The effective income tax rates during the thirteen and thirty-nine weeks ended September 28, 2025 increased as compared to the same periods in the prior year primarily due to (i) the changes in income before income taxes, (ii) the increase in FICA tax credits and the corresponding change in valuation allowance and (iii) the impact of executive compensation.

Previous 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.

Current wording

Net income and net income margin during the thirty-nine weeks ended September 28, 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 a higher 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 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.

Current wording

Restaurant level operating profit margin during the thirty-nine weeks ended September 28, 2025 decreased as compared to the same period in the prior year primarily due to (i) inflation across commodities, (ii) increases in restaurant-level wages and (iii) increases in preopening expenses. This was partially offset by the leverage associated with menu price increases.

Previous 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.

Current wording

Restaurant level operating profit for the thirteen and thirty-nine weeks ended September 28, 2025 increased as compared to the same periods in the prior year due to sales growth driven by the increase in (i) restaurant locations, (ii) traffic and (iii) menu prices. This was partially offset by an increase in (i) labor costs, (ii) food and beverage expenses, (iii) other restaurant operating expenses, (iv) occupancy expense and (v) preopening expenses.

Previous 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.

Current wording

Adjusted EBITDA decreased during the thirty-nine weeks ended September 28, 2025 as compared to the same period in the prior year primarily due to the increase in general and administrative expenses partially offset by the increase in restaurant level operating profit.