Why First Watch Restaurant Stock Is Sinking Today
Key Points
First Watch grew revenue by 20% in Q4 and tripled analysts' expectations for earnings per share.
However, its soft 2026 guidance amid broader macroeconomic pressures sent shares down.
Ultimately, First Watch offers steady store count expansion, a strong culture, and differentiation as a niche leader -- all at a reasonable valuation.
- 10 stocks we like better than First Watch Restaurant Group ›
Shares of daytime diner First Watch Restaurant Group (NASDAQ: FWRG) are down 13% as of 11 a.m. ET on Tuesday after the company reported fourth-quarter earnings. While the market's reaction to First Watch's Q4 earnings and guidance was adverse, I think it may be an overreaction. The company's 20% sales growth matched Wall Street's expectations, and its earnings per share of $0.24 tripled analysts' expectations. For the full year, First Watch grew its store count by 11% and delivered same-store sales (SSS) growth of 3.6%.
Despite these exceptional figures, the company's conservative guidance worried the market. Management guided for 2026 revenue growth of 12% to 14%, while SSS would increase only 1% to 3% -- both declines from 2025. Similarly, the company guided for its store count to grow 9%, compared with historical double-digit growth. Noting this soft guidance, Chief Executive Officer Chris Tomasso explained, "I do think that the entire category has reason to be cautious here in February about what's gonna ensue for the balance of the year." While consumer spending remains weak, First Watch has held up well in this pressured environment. Black Box Intelligence estimated that same-store traffic declined 1.9% in 2025, but First Watch delivered 0.5% same-store traffic growth, continuing its long-term outperformance on this metric.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Image source: Getty Images.
From a 1,000-foot view, there is still a lot to like about First Watch, as well. Its focus on operating only from 7 a.m. to 2:30 p.m. is unique and only requires one shift per day across its employee base. This differentiation streamlines operations and keeps employees happy, as evidenced by First Watch landing on Glassdoor's 2026 25 Best Places to Work in Consumer Services list. From a food perspective, First Watch continues to receive accolades left and right, recently landing at No. 4 on Yelp's Most Loved Brands of 2025 -- an impressive feat for the up-and-coming daytime-only diner.
Today, First Watch has an alluring Enterprise Value to Cash From Operations ratio of 15 -- compared to Texas Roadhouse's 16 -- especially considering the former's outsize growth potential. I'll be watching this daytime diner closely.
Should you buy stock in First Watch Restaurant Group right now?
Before you buy stock in First Watch Restaurant Group, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and First Watch Restaurant Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $409,970!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,174,241!*
Now, it’s worth noting Stock Advisor’s total average return is 889% — a market-crushing outperformance compared to 192% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of February 24, 2026.
Josh Kohn-Lindquist has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Recommended Articles
