First Watch (NASDAQ:FWRG) Reports Sales Below Analyst Estimates In Q1 Earnings By Stock Story

Breakfast restaurant chain First Watch Restaurant Group (NASDAQ:FWRG)
missed analysts’ expectations in Q1 CY2024, with revenue up 14.7% year on year to $242.4 million. It made a GAAP profit of $0.12 per share, down from its profit of $0.15 per share in the same quarter last year.

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First Watch (FWRG) Q1 CY2024 Highlights:

• Revenue: $242.4 million vs analyst estimates of $245 million (1.1% miss)
• Adjusted EBITDA: $28.6 million vs analyst estimates of $24.5 million (16.7% beat)
• EPS: $0.12 vs analyst estimates of $0.10 (26.3% beat)
• Full year guidance for same store sales and revenue growth lowered; adjusted EBITDA guidance maintained
• Gross Margin (GAAP): 22.5%, down from 23% in the same quarter last year
• Same-Store Sales were up 0.5% year on year
• Store Locations: 531 at quarter end, increasing by 47 over the last 12 months
• Market Capitalization: $1.52 billion

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.

Sit-Down DiningSit-down restaurants offer a complete dining experience with table service. These establishments span various cuisines and are renowned for their warm hospitality and welcoming ambiance, making them perfect for family gatherings, special occasions, or simply unwinding. Their extensive menus range from appetizers to indulgent desserts and wines and cocktails. This space is extremely fragmented and competition includes everything from publicly-traded companies owning multiple chains to single-location mom-and-pop restaurants.

Sales GrowthFirst 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 other hand, First Watch can still achieve high growth rates because its revenue base is not yet monstrous.

As you can see below, the company’s annualized revenue growth rate of 20.5% over the last four years (we compare to 2019 to normalize for COVID-19 impacts) was exceptional as it added more dining locations and increased sales at existing, established restaurants.

This quarter, First Watch’s revenue grew 14.7% year on year to $242.4 million, falling short of Wall Street’s…