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Clear out junk files and repair common Windows errorsFree Scan →Scan for outdated or missing drivers - takes under a minuteDriver Scan →Repair Windows errors before they cause bigger problemsFix Now →Yes, First Watch is still growing—but its revenue growth has outpaced improvement in reported operating profit. In fiscal 2025, revenue rose 20.3% to $1.2 billion as the chain opened restaurants and acquired operating franchise locations. Same-restaurant sales increased 3.6%, but traffic grew just 0.5%, while GAAP operating margin fell to 2.3% from 3.9%. The latest reported quarter, Q2 2026, kept revenue growth in double digits but showed slightly negative same-restaurant traffic and the same 2.3% operating margin.
Is First Watch still growing?
Yes. First Watch Restaurant Group expanded its restaurant base and increased sales in fiscal 2025, then reported further revenue growth in the second quarter of fiscal 2026. The important distinction is that company-wide growth includes new locations and acquisitions; it is not a measure of how much sales grew at restaurants already in the comparable-store base.
| Measure | Fiscal 2025 | Q2 2026, ended June 28, 2026 |
|---|---|---|
| Revenue | $1.2 billion, up 20.3% year over year [First Watch 2025 Form 10-K] | $354.7 million, up 15.2% year over year [First Watch Q2 2026 Form 10-Q] |
| System-wide sales | $1.4 billion, compared with $1.2 billion in fiscal 2024 [First Watch 2025 Form 10-K] | $397.0 million, up 14.7% year over year [First Watch Q2 2026 Form 10-Q] |
| Same-restaurant sales | Up 3.6% [First Watch 2025 Form 10-K] | Up 3.4% [First Watch Q2 2026 Form 10-Q] |
| Same-restaurant traffic | Up 0.5% [First Watch 2025 Form 10-K] | Down 0.4% [First Watch Q2 2026 Form 10-Q] |
| GAAP operating margin | 2.3%, down from 3.9% in fiscal 2024 [First Watch 2025 Form 10-K] | 2.3%, compared with 2.4% a year earlier [First Watch Q2 2026 Form 10-Q] |
First Watch ended fiscal 2025 with 633 system-wide restaurants across 32 states: 560 company-owned and 73 franchise-owned. It opened 64 system-wide restaurants during the year and acquired 19 operating restaurants from franchisees. Those additions help explain why total revenue grew much faster than same-restaurant sales.
What same-restaurant sales measure
First Watch defines same-restaurant sales using a base of company-owned First Watch restaurants that had been open at least 18 months at the start of the fiscal year. New and transitioning restaurants are excluded. The metric therefore helps separate sales trends at established restaurants from growth created by adding locations; it does not represent the performance of every restaurant in the system.
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Why did revenue grow while operating income fell?
Revenue can rise as a company opens or buys restaurants even when its operating costs grow faster than its earnings. That is what the fiscal 2025 totals show: revenue increased 20.3%, while income from operations fell to $27.5 million from $38.9 million in fiscal 2024. Operating margin—the share of revenue left after operating expenses—declined to 2.3% from 3.9%.
Profit measures below operating income tell different parts of the business story and should not be substituted for the GAAP result.
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| Measure | Fiscal 2025 | Fiscal 2024 | How to read it |
|---|---|---|---|
| Income from operations | $27.5 million | $38.9 million | GAAP operating profit; its margin fell to 2.3% from 3.9% [First Watch 2025 Form 10-K] |
| Restaurant-level operating profit | $224.1 million | Not stated in the cited fiscal 2025 summary | Company-defined, non-GAAP measure; margin declined to 18.5% from 20.1% [First Watch 2025 Form 10-K] |
| Net income | $19.4 million | $18.9 million | Bottom-line profit after expenses and other items [First Watch 2025 Form 10-K] |
| Adjusted EBITDA | $120.9 million | $113.8 million | Company-reported adjusted, non-GAAP earnings measure [First Watch 2025 Form 10-K] |
The gap between restaurant-level operating profit and income from operations matters: the former is a company-defined measure, not GAAP operating income. It can illuminate restaurant-level economics, but it does not erase the decline in consolidated operating income or margin.
Are established restaurants growing, or is expansion doing most of the work?
Both contributed, but the reported figures point to expansion as a major driver of the headline increase. Fiscal 2025 same-restaurant sales grew 3.6%, while system-wide restaurants increased through openings and the acquisition of 19 operating franchise locations. Same-restaurant traffic rose only 0.5%, so the sales increase was not matched by a similarly strong increase in guest visits.
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The pattern continued in Q2 2026: same-restaurant sales were up 3.4%, while same-restaurant traffic declined 0.4%. Meanwhile, revenue rose 15.2% and system-wide sales rose 14.7%. This is not proof that expansion is failing; it does mean that company-wide sales growth and the established-store customer trend should be evaluated separately.
What costs put pressure on margins?
First Watch reported commodity inflation of 5.0% in fiscal 2025, driven largely by eggs, coffee, avocado and bacon. Restaurant-level labor inflation was 3.7%. Cost inflation is relevant context for the margin decline, although the company’s reported figures do not establish that any single input caused the entire change.
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In Q2 2026, the company reported commodity deflation of 1.6% for a second consecutive quarter. Lower egg, avocado and bacon costs were partly offset by higher coffee prices and the introduction of higher-cost beef offerings. Restaurant-level wage inflation was 4.1% in the quarter.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What does First Watch expect for fiscal 2026?
On August 4, 2026, management forecast the following fiscal 2026 ranges. These are outlook figures, not achieved results.
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| Management’s fiscal 2026 outlook, issued August 4, 2026 | Range |
|---|---|
| Same-restaurant sales growth | 1.5%–3.0% |
| Total revenue growth | 12.5%–14.0% |
| Adjusted EBITDA | $133 million–$136 million |
| Net new system-wide restaurants | 60–62 |
Management said the outlook includes the net impact of completed acquisitions—approximately 1 percentage point of revenue growth and $2 million of adjusted EBITDA. It did not reconcile adjusted EBITDA guidance to GAAP because it said it could not reasonably predict all reconciling items. The company also estimated full-year 2026 labor inflation of approximately 3.5%–4.5% and commodity inflation of approximately 0%–1.5%; these are management’s estimates, not independently verified forecasts. [First Watch Q2 2026 results release]
How to read the growth story
- For expansion: restaurant openings and acquired locations contributed to a larger system and higher revenue.
- For established-store demand: sales remained positive, but traffic was only slightly positive in fiscal 2025 and turned negative in Q2 2026.
- For profitability: GAAP operating income and margin weakened in fiscal 2025; restaurant-level operating profit and adjusted EBITDA are distinct company-defined measures.
- For the outlook: use the August 2026 guidance as management’s forecast, including its stated acquisition effects, rather than as a result already delivered.
First Watch CEO and President Chris Tomasso described fiscal 2025 as a year of “significant progress,” citing new-restaurant growth of nearly 11%, revenue growth above 20%, same-restaurant sales growth of 3.6% and positive traffic. That is management’s characterization; the filed operating-income and margin figures add the essential qualification to the growth story. [SEC-filed fiscal 2025 earnings release, February 24, 2026]
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