First Watch Restaurant Group Reports 17.3% Revenue Growth but Incurred Net Loss in Q1 2026

First Watch Restaurant Group, Inc. reported a significant increase in financial performance for the first quarter of 2026, with total revenues rising 17.3% to $331.0 million, compared to $282.2 million in the same period last year. The growth was driven by a 17.4% increase in restaurant sales, which reached $328.1 million, bolstered by the opening of 16 new restaurants and a same-restaurant sales growth of 2.8%. However, the company also experienced a net loss of $2.7 million, or $(0.04) per diluted share, which was an increase from a net loss of $0.8 million, or $(0.01) per diluted share, in the prior year.

The company's operating costs also saw a rise, with total operating expenses increasing to $330.0 million from $281.1 million year-over-year. Notably, labor and related expenses surged by 14.3% to $110.6 million, reflecting the impact of increased headcount and wage inflation. General and administrative expenses rose sharply by 32.2% to $39.9 million, primarily due to higher costs associated with a leadership conference and increased stock-based compensation. Despite these challenges, the restaurant-level operating profit margin improved to 18.5%, up from 16.5% in the previous year, indicating better operational efficiency at the restaurant level.

In terms of strategic developments, First Watch expanded its footprint, operating 572 company-owned and 76 franchise-owned restaurants across 32 states as of March 29, 2026. The company has also been actively managing its debt, with total outstanding borrowings under its credit facility amounting to $265.3 million. The company reported cash and cash equivalents of $23.6 million, which, along with its operational cash flow, is expected to support its liquidity needs for the next 12 months.

Looking ahead, First Watch anticipates annual same-restaurant sales growth to be between 1% to 3%. The company is also preparing for commodity inflation of approximately 1% to 3% for the full year, while labor costs are expected to rise by 3% to 5%. The management remains focused on leveraging its growth strategy, which includes new restaurant openings and enhancing operational efficiencies, to navigate the evolving market conditions and consumer preferences.