Breakfast restaurant chain First Watch Restaurant Group (NASDAQ: FWRG) met Wall Street’s revenue expectations in Q4 CY2025, with sales up 20.2% year on year to $316.4 million. Its GAAP profit of $0.24 per share was significantly above analysts’ consensus estimates.
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First Watch (FWRG) Q4 CY2025 Highlights:
- Revenue: $316.4 million vs analyst estimates of $316.3 million (20.2% year-on-year growth, in line)
- EPS (GAAP): $0.24 vs analyst estimates of $0.07 (significant beat)
- Adjusted EBITDA: $33.69 million vs analyst estimates of $34.2 million (10.6% margin, 1.5% miss)
- EBITDA guidance for the upcoming financial year 2026 is $136 million at the midpoint, below analyst estimates of $145.2 million
- Operating Margin: 2.9%, up from 1.5% in the same quarter last year
- Locations: 633 at quarter end, up from 572 in the same quarter last year
- Same-Store Sales rose 3.1% year on year (-0.3% in the same quarter last year)
- Market Capitalization: $946 million
” said Chris Tomasso, CEO and President of First Watch. “As we look to 2026 and beyond, we are energized by the growth opportunities across all facets of our business, particularly the expansion of our evolving digital marketing platform.”
Company Overview
Based on a nautical reference to the first work shift aboard a ship, First Watch (NASDAQ: FWRG) is a chain of breakfast and brunch restaurants whose menu is heavily-focused on eggs and griddle items such as pancakes.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years.
With $1.22 billion in revenue over the past 12 months, First Watch is a mid-sized restaurant chain, which sometimes brings disadvantages compared to larger competitors benefiting from better brand awareness and economies of scale. On the bright side, it can still flex high growth rates because it’s working from a smaller revenue base.
As you can see below, First Watch’s 18.7% annualized revenue growth over the last six years was excellent as it opened new restaurants and increased sales at existing, established dining locations.
This quarter, First Watch’s year-on-year revenue growth of 20.2% was excellent, and its $316.4 million of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 15.1% over the next 12 months, a deceleration versus the last six years. Still, this projection is healthy and indicates the market sees success for its menu offerings.
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Restaurant Performance
Number of Restaurants
A restaurant chain’s total number of dining locations influences how much it can sell and how quickly revenue can grow.
First Watch operated 633 locations in the latest quarter. It has opened new restaurants at a rapid clip over the last two years, averaging 10.3% annual growth, much faster than the broader restaurant sector. This gives it a chance to become a large, scaled business over time.
When a chain opens new restaurants, it usually means it’s investing for growth because there’s healthy demand for its meals and there are markets where its concepts have few or no locations.
Same-Store Sales
A company's restaurant base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales gives us insight into this topic because it measures organic growth at restaurants open for at least a year.
First Watch’s demand within its existing dining locations has been relatively stable over the last two years but was below most restaurant chains. On average, the company’s same-store sales have grown by 1.6% per year. This performance suggests it should consider improving its foot traffic and efficiency before expanding its restaurant base.
In the latest quarter, First Watch’s same-store sales rose 3.1% year on year. This growth was an acceleration from its historical levels, which is always an encouraging sign.
Key Takeaways from First Watch’s Q4 Results
It was good to see First Watch beat analysts’ EPS expectations this quarter. On the other hand, its full-year EBITDA guidance missed and its EBITDA fell slightly short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 1.8% to $15.23 immediately following the results.
Big picture, is First Watch a buy here and now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
