1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Valuation
Discussion
Symbol
FWRG
Event Date
2021-10-01
Sector
Consumer
Subsector
Hotels, Restaurants & Leisure
Offer Range
$18.00-$18.00
Shares Offered
9.46M
59.05M
$1.1B
16.0%
Implied Upside vs Midpoint
Description
We are First Watch – an award-winning daytime restaurant concept serving made-to-order breakfast, brunch and lunch using fresh ingredients. Since our founding in 1983, we have built our brand on our commitment to operational excellence, our “You First” culture and our culinary mission centered around a fresh, innovative menu that is continuously evolving. These foundational brand pillars have established First Watch as the largest and fastest growing concept in daytime dining (“Daytime Dining”) - an emerging restaurant segment that is differentiated from legacy segments by operating exclusively during daytime hours with a progressive on-trend chef-driven menu. Our one shift, from 7:00 a.m. to 2:30 p.m., and one main menu enable us to optimize restaurant operations and attract and retain employees who are passionate about hospitality and drawn to our “No Night Shifts Ever” approach. This differentiation has driven high employee satisfaction and retention, and strong consumer demand and operating performance as evidenced by our 28 consecutive quarters of same-restaurant sales growth from fiscal 2013 to fiscal 2019 and positive annual same-restaurant traffic growth from fiscal 2014 to fiscal 2019, prior to the emergence of the COVID-19 pandemic. In January 2020, we were recognized as “America’s Favorite Restaurant Brand” in Market Force’s annual consumer study and as one of three industry finalists for Black Box Intelligence’s 2020 Best Practices award. Our unique one-shift and one-menu approach, coupled with our commitment to our employees and customers throughout the COVID-19 pandemic allowed us to retain and attract employees and reopen our restaurants with accelerating operating momentum in the second half of 2020 and into 2021, recording same-restaurant sales growth of 16.3% in the second fiscal quarter ended June 27, 2021 (“second fiscal quarter of 2021”) relative to the fiscal quarter ended June 30, 2019 (“second fiscal quarter of 2019”). Importantly, our same-restaurant traffic growth in the second fiscal quarter of 2021 was ahead of the comparable quarter in 2019 by 1.0%. Throughout the COVID-19 pandemic, we invested in supplemental compensation and expanded health benefits for our people while at the same time we accelerated strategic investments in our business and continued to expand our footprint, opening 42 and 18 System-wide NROs in fiscal 2020 and during the twenty-six weeks ended June 27, 2021, respectively. As of June 27, 2021, we had 423 System-wide restaurants across 28 states, 335 of our restaurants were company-owned and 88 were operated by our franchisees. Our Promise: Yeah, It’s Fresh! --- At First Watch, we take a creative approach to Daytime Dining led by a focus on and commitment to freshness. Each item is made-to-order and prepared with care – you will not find microwave ovens, heat lamps or deep fryers in our kitchens. Every morning, we arrive at the crack of dawn to slice and juice fresh fruits and vegetables, bake muffins, brew our fresh coffee and whip up our French Toast batter from scratch. Our award-winning chef-driven menu includes elevated executions of classic favorites for breakfast, lunch and brunch, along with First Watch-specific specialties such as our protein-packed Quinoa Power Bowl®, Farmstand Breakfast Tacos, Avocado Toast, Morning Meditation (juiced in-house daily), our new Vodka Kale Tonic, Chickichangas and our famous Million Dollar Bacon. While our menu constantly evolves, our focus on – and commitment to – freshness never wavers. Our Mission: You First For more than 38 years, we have cultivated an organizational culture built on our mission of “You First,” which puts serving others above all else. As a company, we put our employees first and empower them to do whatever it takes to put our customers first. We give back in meaningful ways to the local communities in which we operate and also support national and international causes we care about, such as our Project Sunrise partnership that supports women-owned coffee farms in Colombia, which in turn empowers them to reinvest in their communities. Our “You First” mission, in addition to our quality of life advantage inherent in our single-shift operating model, has led us to be recognized as an employer of choice in our industry, according to a five-year longitudinal study of employee surveys on Glassdoor published in June 2019 by William Blair. We believe that our approach to our employees not only long before but also during the COVID-19 pandemic has enabled us to retain and attract employees to get our restaurants staffed up to meet the current consumer demand better than our peers. --- Proven Record of Sustained Growth We have delivered almost four decades of sales and unit growth as a result of our broad brand appeal, compelling economic proposition and difficult-to-replicate business model. We have achieved consistent growth in total System-wide restaurants to 423 as of June 27, 2021, from 277 restaurants in fiscal 2015. Over the six-year period ended December 29, 2019 (prior to the emergence of the COVID-19 pandemic), we: • Consistently delivered same-restaurant sales growth, averaging 6.3% annually • Consistently achieved positive annual same-restaurant traffic growth, averaging 1.4% annually Over the five-year period ended December 29, 2019 (prior to the emergence of the COVID-19 pandemic), we: • Consistently increased AUVs by 25.7%, from $1.3 million in fiscal 2015 to $1.6 million in fiscal 2019 • Consistently opened new company-owned restaurants with an average Cash-on-Cash Return of 50.8%. --- First Watch Restaurant Group, Inc. was incorporated in Delaware on August 10, 2017, under the name AI Fresh Super Holdco, Inc. We changed our name on December 20, 2019 to First Watch Restaurant Group, Inc. Our principal executive offices are located at 8725 Pendery Place, Suite 201, Bradenton, FL 34201, and our telephone number is (941) 907-9800. Our corporate website address is www.firstwatch.com.
First Watch Restaurant Group, Inc. annual income statement and balance sheet, FY 2022 to FY 2025, as reported in SEC filings.
| Metric | FY 2022 | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|---|
| Revenue | $730M | $892M | $1.0B | $1.2B |
| Operating income | $16.9M | $41.3M | $38.9M | $27.5M |
| Net income | $6.9M | $25.4M | $18.9M | $19.4M |
| Metric | FY 2022 | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|---|
| Total assets | $1.1B | — | $1.5B | $1.7B |
| Total liabilities | $581M | — | $919M | $1.1B |
| Total equity | $523M | $561M | $595M | $626M |
| Cash & equivalents | $49.7M | — | $33.3M | $21.2M |