First Watch Restaurant Group: 3 Key Takeaways for Long-Term Investors

On its third-quarter 2026 earnings call, held on Nov. 3, 2026, First Watch (NASDAQ:FWRG) announced total revenue growth of 10.7% to $349.9 million. Top-line gains and operational leverage helped cushion profitability against soft traffic across the broader restaurant sector. Three things management said stand out.

1. Raising Long-Term EBITDA Guidance Above Prior Targets

First Watch boosted its annual forecast for adjusted EBITDA, an adjusted metric measuring operational cash profit, through 2028. Management redeployed store labor and leveraged corporate headcount to expand profit faster than store footprint growth.

Reflecting our confidence in the initiatives currently underway, we are raising our outlook for adjusted EBITDA annual growth through 2028 to greater than 15%, above our prior long-term target of 11% to 14%.
-- Ashlee Weisser, Chief Financial Officer

2. Testing New Digital and Television Channels to Reach Diners

Management launched media pilots across local linear television and digital platforms to broaden customer awareness. A fourth-quarter pilot with TikTok GO, an online-to-offline local discovery service, aims to convert digital engagement into physical restaurant visits.

Against that backdrop, we're excited to start testing the online to offline services with TikTok GO in the U.S. aimed at encouraging local discovery.
-- Christopher Tomasso, Chief Executive Officer and President

3. Adopting a Flexible Expansion Pace Beyond 2027

Higher interest rates and floating-rate borrowing costs prompted the restaurant operator to preserve capital allocation optionality. The business expects to open approximately 55 systemwide restaurants in 2027 while setting future unit targets year by year.

Taken together, we believe it is prudent to remain flexible regarding our annual opening target beyond 2027.
-- Ashlee Weisser, Chief Financial Officer

Looking Ahead

Same-restaurant sales growth is holding near 2% for the full year as disciplined store execution protects operating margins. A higher-income customer demographic and strong returns from new restaurants continue to support performance in a dynamic environment.

Our year-to-date performance has demonstrated our ability to deliver profitable growth, expand margins and execute on our development strategy despite challenging industry and market dynamics.
-- Ashlee Weisser, Chief Financial Officer

Capital priorities center on sustained store productivity and positive free cash flow starting in 2027. Management plans to preserve balance sheet flexibility while extending its market lead in daytime dining.

Combined with compelling new restaurant returns, significant white space for expansion and a disciplined approach to capital allocation, we believe we are well positioned to create substantial long-term value for our shareholders.
-- Ashlee Weisser, Chief Financial Officer

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