In 2025, First Watch achieved industry-leading new restaurant growth of nearly 11% and increased total revenues by more than 20%, with same-restaurant sales growth of 3.6% and positive same-restaurant traffic. The company has opened new restaurants at a rapid clip over the last two years, averaging 10.3% annual growth, much faster than the broader restaurant sector. However, profitability is more mixed, with income from operations margins compressing to 2.3% from 3.9% and Adjusted EBITDA margin declining to 9.9% from 11.2%, showing cost and investment headwinds.
Cyborg Score Rationale
First Watch achieved industry-leading new restaurant growth of nearly 11% and revenue increases exceeding 20% in 2025, demonstrating strong top-line expansion. However, same-store sales growth is projected to decelerate to 1-3% in 2026, macro headwinds persist, negative traffic trends exist, and the upscale dining environment remains challenging. Margins are compressing despite strong unit growth, limiting operational leverage.
Top Insights
First Watch operates 633 system-wide restaurants (560 company-owned and 73 franchise-owned) across 32 states
For 2026, the company projects same-restaurant sales growth of 1-3%, total revenue growth of 12-14%, and Adjusted EBITDA of $132-140 million
Valuation remains stretched at 55.9x FY 2026 P/E, with fair value estimated in the low teens
Management delivered a full-year restaurant-level operating profit margin of 18.5%, within the company's targeted long-term range
Casual Dining - Breakfast/Brunch — Casual dining restaurant with brunch and breakfast availability
Fast-Casual Breakfast — Parent company of IHOP and Applebee's with breakfast focus
Recent Developments
(February 2026) First Watch reported Q4 2025 results and 2026 outlook, with total revenues up 20.3% to $1.22 billion
(February 2026) Multiple analyst price target cuts issued following Q4 earnings, with growth slowing and FY 2026 guidance disappointing versus prior expectations
(January 2026) First Watch outlined record restaurant openings, continued sales growth, and an expanded marketing and menu strategy during its fourth-quarter earnings call
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