First Watch Restaurant Group, Inc. FWRG Form 10-Q filing Q2 FY2025

Item 1. Financial Statements (Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

(1) Leased assets and liabilities obtained during the twenty-six weeks ended June 29, 2025 and June 30, 2024 include $23.6 million and $28.1 million from business acquisitions, respectively.

The accompanying notes are an integral part of these consolidated financial statements.

FIRST WATCH RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Organization

First Watch Restaurant Group, Inc. (collectively with its wholly-owned subsidiaries, “the Company,” or “Management”) is a Delaware holding company. The Company operates and franchises restaurants in 31 states operating under the “First Watch” trade name, which are focused on made-to-order breakfast, brunch and lunch. The Company does not operate outside of the United States and all of its assets are located in the United States. As of June 29, 2025, the Company operated 531 company-owned restaurants and had 69 franchise-owned restaurants.

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company reports financial information on a 52- or 53-week fiscal year ending on the last Sunday of each calendar year. The quarters ended June 29, 2025 and June 30, 2024 were 13-week periods. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K as of and for the year ended December 29, 2024 (“2024 Form 10-K”).

The accompanying unaudited interim consolidated financial statements have been prepared by the Company in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all the information and notes required by GAAP for complete financial statements. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements included in the 2024 Form 10-K and include all adjustments necessary for the fair statement of the consolidated financial statements for the quarterly periods presented. The results of operations for quarterly periods are not necessarily indicative of the results to be expected for other quarterly periods or the entire fiscal year.

Use of Estimates

The preparation of the unaudited interim consolidated financial statements in accordance with GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited interim consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates and such differences could be material.

Fair Value of Financial Instruments

Certain assets and liabilities are carried at fair value. Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The carrying amounts of the Company’s financial instruments, including cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities approximate their fair values due to their short-term maturities.

Interest Rate Swaps

As an element of the Company’s interest rate risk management strategy, Management uses interest rate swaps. The intent of these instruments is to reduce cash flow exposure to variability in future interest rates on the Company’s debt. Management has elected to designate and qualify the interest rate swaps as cash flow hedges. As such, the instruments are recorded on the balance sheet at fair value. Thereafter, gains or losses on the instruments are recognized in equity as changes to Other Comprehensive Income and subsequently reclassified into earnings at the time of the Company’s debt interest payments.

Summary of Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which establishes new income tax disclosure requirements including disaggregated information about a reporting entity’s effective tax rate reconciliation as well as disaggregated information on income taxes paid. The amendments are effective for fiscal years beginning after December 15, 2024 and should be applied on a prospective basis, however, retrospective application is permitted. Management is currently evaluating the impact of this new standard and anticipates an expansion in the Company’s annual income tax disclosures.

FIRST WATCH RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures, which establishes new disclosure requirements related to purchases of inventory, employee compensation, selling expenses, depreciation and intangible amortization. The new guidance is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027 and should be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. Management is currently evaluating the impact of this new standard.

Recent accounting guidance not discussed herein is not applicable, did not have, or is not expected to have a material impact to the Company.

3. Business Acquisitions

During the second quarter of 2025, the Company acquired, in two separate transactions, substantially all the assets associated with 19 franchise-operated First Watch restaurants. For both transactions, the purchase price was allocated to the fair value of the assets acquired and the liabilities assumed. The allocations were based on preliminary valuations and are subject to adjustment as additional information is available. The Company expects to finalize the valuations of these assets no later than one year from the respective acquisition dates.

Goodwill reflects the value of expected synergies and assembled workforce, and was assigned to the Company’s single reporting unit. The Company will treat the transactions as asset acquisitions for income tax purposes, which allows for any goodwill recognized to be tax deductible and amortized over a 15-year statutory life.

The weighted average estimated useful life of the reacquired rights is 6.1 years.

Pro-forma financial information of the acquired restaurants for periods prior to the acquisition dates is not presented due to the immaterial impact on our consolidated financial statements.

FIRST WATCH RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Revenues

Revenues recognized disaggregated by type were as follows:

The following tables include a detail of liabilities from contracts with customers:

Changes in deferred gift card contract liabilities were as follows:

Changes in deferred franchise fee contract liabilities were as follows:

FIRST WATCH RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Accounts Receivable

Accounts receivable consisted of the following:

6. Accrued Liabilities

Accrued liabilities consisted of the following:

7. Debt

Long-term debt, net consisted of the following:

Credit Facility

FWR Holding Corporation (“FWR”), a subsidiary of the Company, is the borrower under the credit agreement dated October 6, 2021, the terms of which were amended on February 24, 2023 and January 5, 2025, which provides for (i) a $225.0 million term loan A facility and delayed draw facility (the “Term Facilities”) and (ii) a $125.0 million revolving credit facility (“the Revolving Credit Facility”), and together with the Term Facilities, (the “Credit Facility”). The Credit Facility matures on January 5, 2029.

FIRST WATCH RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)

During the second quarter of 2025, the Company drew $27.5 million on the delayed draw facility and $32.5 million on the revolving credit facility, primarily to fund the business acquisitions. As of June 29, 2025, the delayed draw facility was fully drawn and the balances shall be due under the same repayment terms as the term loan A facility.

As of June 29, 2025, borrowings under the Credit Facility bear interest at the option of FWR at either (i) the alternate base rate plus a margin of between 150 and 225 basis points depending on the total rent adjusted net leverage ratio of FWR and its restricted subsidiaries on a consolidated basis (the “Total Rent Adjusted Net Leverage Ratio”) or (ii) SOFR plus a credit spread adjustment of 10 basis points plus a margin of between 250 and 325 basis points depending on the Total Rent Adjusted Net Leverage Ratio. Refer to Note 8, Interest Rate Swaps, for information about the Company’s variable-to-fixed interest rate swap agreements.

Fair Value of Debt

The estimated fair value of the outstanding debt, excluding finance lease obligations and financing obligations, is classified as Level 3 in the fair value hierarchy and was estimated using discounted cash flow models, market yield and yield volatility. The following table includes the carrying value and fair value of the Company’s debt as of the dates indicated:

Debt Covenants

The Credit Facility is guaranteed by all of FWR’s wholly-owned subsidiaries and by AI Fresh Parent, Inc., a Delaware corporation and the direct parent company of FWR (“Holdings”), and is secured by associated collateral agreements that pledge a lien on substantially all of FWR’s and each guarantor’s assets, including fixed assets and intangibles, in each case, subject to customary exceptions.

Under the credit agreement, FWR (and in certain circumstances, Holdings) and its subsidiaries are subject to affirmative, negative and financial covenants, maintenance of certain ratios, restrictions on additional indebtedness and events of default for facilities of this type (with customary grace periods, as applicable, and lender remedies). FWR was in compliance with its covenants under the credit agreement as of June 29, 2025.

8. Interest Rate Swaps

The Company utilizes interest rate swaps to hedge a portion of the cash flows of the Company’s variable rate debt.

On June 23, 2023, the Company entered into two variable-to-fixed interest rate swaps. These interest rate swaps have an aggregate notional amount of $90.0 million and mature on October 6, 2026. Under the terms of the interest rate swaps, the Company will pay a weighted average fixed rate of 4.16% on the notional amount and will receive payments from, or make payments to, the counterparties based on the three-month SOFR rate.

On May 17, 2024, the Company entered into two additional variable-to-fixed interest rate swaps. These interest rate swaps have an aggregate notional amount of $60.0 million and mature on June 30, 2027. Under the terms of the interest rate swaps, the Company will pay a weighted average fixed rate of 4.42% on the notional amount and will receive payments from, or make payments to, the counterparties based on the three-month SOFR rate.

The fair value measurement of the interest rate swaps was based on the contractual terms and market-based inputs. The interest rate swaps were valued using a discounted cash flow analysis on the expected cash flows using observable inputs including interest rate curves and credit spreads. Although the majority of the inputs used to value the instruments fall within Level 2 of the fair value hierarchy, the credit valuation adjustments utilized Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and the counterparties. The impact of the credit valuation adjustments was not determined to be significant to the overall valuation. As a result, the derivative was classified as Level 2 in the fair value hierarchy.

Amounts reported in Other comprehensive income related to the interest rate swaps are reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the twenty-six weeks ended June 29, 2025, a total of $0.1 million was reclassified from Other comprehensive income as a reduction to Interest expense. Over the next 12 months, the Company estimates that $0.6 million will be reclassified as an increase to interest expense.

FIRST WATCH RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)

9. Leases

The following table includes detail of lease assets and liabilities:

(1) Excludes all variable lease expense for real estate leases.

The components of lease expense are as follows:

(1) Includes contingent rent expense of $0.4 million during both the thirteen weeks ended June 29, 2025 and June 30, 2024, respectively, and $0.9 million for both the twenty-six weeks ended June 29, 2025 and June 30, 2024.

Supplemental cash flow information related to leases was as follows:

FIRST WATCH RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Supplemental information related to leases was as follows:

(1) Based on the Company’s incremental borrowing rate.

10. Deferred Compensation

The Company adopted a non-qualified deferred compensation plan (the “First Watch Deferred Compensation Plan”) effective January 1, 2025. The First Watch Deferred Compensation Plan allows officers and other key employees to defer their compensation within annual limits designated by the Company. Discretionary matching and other credits may be made to the accounts of active participants, which vest based on an employee’s years of service or vest in full upon an active participant’s death, disability or a Company change in control event, as defined in the plan. Participants’ earnings on contributions fluctuate with the actual earnings and losses of available investment choices selected by the participants.

While the First Watch Deferred Compensation Plan is unsecured, the Company has elected to fund certain of these obligations through a rabbi trust, the assets of which consist of Company-owned life insurance policies. The assets held in the rabbi trust are not available for general corporate purposes and are subject to creditor claims in the event of insolvency.

The cash surrender value of the life insurance policies held in the rabbi trust is recorded in other long-term assets. As of June 29, 2025, rabbi trust assets totaled $1.0 million. Changes to the cash surrender value and any increases or decreases to deferred compensation liabilities incurred under the First Watch Deferred Compensation Plan are recorded as general and administrative expenses. As of June 29, 2025, the deferred compensation obligation included in other long-term liabilities totaled $1.0 million.

11. Equity and Stock-Based Compensation

Stock option awards

There were no stock option awards granted during the twenty-six weeks ended June 29, 2025. A summary of stock option activity during the twenty-six weeks ended June 29, 2025 is as follows:

The aggregate intrinsic value is based on the difference between the exercise price of the stock option and the closing price of the Company’s common stock on Nasdaq on the last trading day of the period.

FIRST WATCH RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)

A summary of the non-vested stock option activity during the twenty-six weeks ended June 29, 2025 is as follows:

Restricted stock units

During the twenty-six weeks ended June 29, 2025, a total of 1,028,509 restricted stock units (“RSUs”) were granted. Of the total RSU’s granted, 597,737 will vest ratably over a period of three years from grant date, 65,364 will vest one year from the grant date, and the remaining 365,408 will vest four years from the grant date. A summary of the Company’s RSU activity during the twenty-six weeks ended June 29, 2025 is as follows:

The aggregate intrinsic value is based on the closing price of the Company’s common stock on Nasdaq of $16.11 and $18.70 on June 27, 2025 and December 27, 2024, the last trading days of the periods, respectively.

Stock-based compensation expense, net of amounts capitalized, was $2.8 million and $2.5 million during the thirteen weeks ended June 29, 2025 and June 30, 2024, respectively, and $5.0 million and $4.3 million during the twenty-six weeks ended June 29, 2025 and June 30, 2024, respectively. Capitalized stock-based compensation included in property, fixtures and equipment totaled $0.1 million for the twenty-six weeks ended June 29, 2025. The total related income tax benefit for stock-based compensation expense was $0.2 million and $0.1 million during the thirteen weeks ended June 29, 2025 and June 30, 2024, respectively, and $1.2 million and $1.4 million during the twenty-six weeks ended June 29, 2025 and June 30, 2024, respectively.

Unrecognized stock-based compensation expense

The following represents unrecognized stock-based compensation expense and the remaining weighted average vesting period as of June 29, 2025:

FIRST WATCH RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)

12. Income Taxes

The effective income tax rate was 41.1% and 35.4% for the thirteen weeks ended June 29, 2025 and June 30, 2024, respectively, and 37.4% and 32.3% for the twenty-six weeks ended June 29, 2025 and June 30, 2024, respectively. In the United States, a restaurant company employer may claim a credit against its federal income taxes for FICA taxes paid on certain tipped wages (the “FICA tax credit”). The level of FICA tax credits is primarily driven by restaurant sales. Income tax expense during the thirteen and twenty-six weeks ended June 29, 2025 decreased as compared to the same periods in the prior year primarily due to the decrease in income before taxes, the benefit of FICA tax credits and the change in the valuation allowance. The effective income tax rates during the thirteen and twenty-six weeks ended June 29, 2025 increased as compared to the same periods in the prior year primarily due to the benefit of FICA tax credits and the change in valuation allowance.

The effective income tax rates for the thirteen and twenty-six weeks ended June 29, 2025 and June 30, 2024 were different than the blended federal and state statutory rate primarily due to the change in the valuation allowance, the benefit of FICA tax credits and the impacts of executive stock-based compensation.

On July 4, 2025, H.R. 1 – One Big Beautiful Bill (“the Bill”) was enacted into law. The Bill provides for significant U.S. tax law changes and modifications, including making permanent 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. Since the legislation was not signed into law until after the end of our second quarter, the impacts are not included in our operating results for the twenty-six weeks ended June 29, 2025. We are currently assessing its impact on our consolidated financial statements.

Valuation allowance

Management evaluates quarterly whether the resulting deferred tax assets are realizable given the Company’s earnings history. Based on the available evidence, the Company does not meet the more likely than not standard related to the realization of a portion of the deferred tax assets as of June 29, 2025. Accordingly, the Company has established a valuation allowance on the portion of deferred tax assets deemed not realizable, including state charitable contribution carryovers, various state loss carryforwards and various federal tax credit carryforwards.

Management continues to assess the rationale for recording a valuation allowance for deferred tax assets. As the Company’s future taxable earnings increase and deferred tax assets are utilized, it is possible that a portion of the valuation allowance will no longer be needed. Release of any valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense in the period of the release. The timing and amount of any release related to future taxable income is currently indeterminable.

13. Commitments and Contingencies

Legal Proceedings

The Company is subject to legal proceedings, claims and liabilities that arise in the ordinary course of business. The amount of the anticipated liability with respect to these matters was not material as of June 29, 2025. In the event any litigation losses become probable and estimable, the Company will recognize anticipated losses.

14. Segment Information

Management determined the Company’s single operating segment on the basis that the Company’s Chief Operating Decision Maker (the “CODM”), the Chief Executive Officer, assesses performance and allocates resources at the Company’s consolidated level. The Company’s CODM uses consolidated net income to evaluate performance and make key operating decisions, such as investments in our long-term growth strategy. This measure is also used to monitor budget against actual results.

FIRST WATCH RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Revenue is derived from sales of food and beverage, net of discounts, by our restaurants as well as franchise royalty, system fund and initial franchise fees. The measure of total assets for the reporting segment is reported on the consolidated balance sheets as total assets. The measure of capital expenditures for the reporting segment is reported on the consolidated statements of cash flows.

The following table details consolidated net income for the segment for the periods indicated:

(1) General and administrative expenses excludes stock-based compensation, net of amounts capitalized presented separately.

(2) Other segment items included in segment net income are primarily transaction expenses, and impairments and loss on disposal of assets.

15. Net Income Per Common Share

The following table sets forth the computations of basic and diluted net income per common share:

Diluted net income per common share is calculated by adjusting the weighted average shares outstanding for the theoretical effect of potential common shares that would be issued for stock option awards outstanding and unvested as of the respective periods using the treasury method.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

First Watch is an award-winning Daytime Dining concept serving made-to-order breakfast, brunch and lunch using fresh ingredients. The Company’s common stock trades on Nasdaq under the ticker symbol “FWRG”. A recipient of hundreds of local “Best Breakfast” and “Best Brunch” accolades, First Watch’s award-winning chef-driven menu includes elevated executions of classic favorites for breakfast, brunch and lunch. For three consecutive years, First Watch was named a Top 100 Most Loved Workplace® by Newsweek and the Best Practice Institute, and in 2024, was named the #1 Most Loved Workplace.

The Company operates and franchises restaurants in 31 states under the “First Watch” trade name and as of June 29, 2025, the Company had 531 company-owned restaurants and 69 franchise-owned restaurants.

Recent Developments

Financial highlights for the thirteen weeks ended June 29, 2025 (“second quarter of 2025”) as compared, unless otherwise indicated below, to the thirteen weeks ended June 30, 2024 (“second quarter of 2024”), reflected the continued momentum of our operating performance and include the following:

• Opened 17 system-wide restaurants in 8 states, with 1 planned closure, resulting in a total of 600 system-wide restaurants (531 company-owned and 69 franchise-owned) across 31 states
• Total revenues increased 19.1% to $307.9 million in the second quarter of 2025 from $258.6 million in the second quarter of 2024
• System-wide sales increased 15.8% to $346.2 million in the second quarter of 2025 from $299.0 million in the second quarter of 2024
• Same-restaurant sales growth of 3.5%
• Same-restaurant traffic growth of 2.0%
• Income from operations margin decreased to 2.4% during the second quarter of 2025 from 6.4% in the second quarter of 2024
• Restaurant level operating profit margin* decreased to 18.6% in the second quarter of 2025 from 21.9% in the second quarter of 2024
• Net income decreased to $2.1 million, or $0.03 per diluted share, in the second quarter of 2025 from net income of $8.9 million, or $0.14 per diluted share, in the second quarter of 2024
• Adjusted EBITDA* decreased to $30.4 million in the second quarter of 2025 from $35.3 million in the second quarter of 2024

• See Non-GAAP Financial Measures Reconciliations section below.

Business Trends

In the second quarter, the Company’s same-restaurant traffic grew 2.0%, our first quarter of positive traffic growth since the first quarter ended March 26, 2023. We expect positive traffic trends to continue through the second half of the year.

Commodity inflation was 8.1% in the second quarter of 2025, driven by eggs, coffee, avocado and bacon. We expect elevated egg costs to moderate in the second half of the year as a result of the favorable trend in cases of avian influenza, which have impacted U.S. chicken flocks. Considering this favorability in egg costs combined with the expected costs of other commodities and the delayed and reduced impact from tariffs, we now project our full year commodity inflation to range between 5% and 7%.

Restaurant-level wage inflation during the second quarter was 3.9% and full year inflation is expected to approximate 3% to 4%.

Key Performance Indicators

Throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we commonly discuss the following key operating metrics that we believe will drive our financial results and long-term growth model. We believe these metrics are useful to investors because management uses these metrics to evaluate performance and assess the growth of our business as well as the effectiveness of our marketing and operational strategies.

New Restaurant Openings (“NROs”): the number of new company-owned First Watch restaurants commencing operations during the period. Management reviews the number of new restaurants to assess new restaurant growth and company-owned restaurant sales.

Franchise-owned New Restaurant Openings (“Franchise-owned NROs”): the number of new franchise-owned First Watch restaurants commencing operations during the period.

Same-Restaurant Sales Growth: the percentage change in year-over-year restaurant sales (excluding gift card breakage) for the comparable restaurant base, which we define as the number of company-owned First Watch branded restaurants open for 18 months or longer as of the beginning of the fiscal year (“Comparable Restaurant Base”). For the thirteen and twenty-six weeks ended June 29, 2025 and June 30, 2024, there were 382 restaurants and 344 restaurants, respectively, in our Comparable Restaurant Base. Measuring our same-restaurant sales growth allows management to evaluate the performance of our existing restaurant base. We believe this measure is useful for investors to provide a consistent comparison of restaurant sales results and trends across periods within our core, established restaurant base, unaffected by results of store openings, closings, and other transitional changes.

Same-Restaurant Traffic Growth: the percentage change in traffic counts as compared to the same period in the prior year using the Comparable Restaurant Base. Measuring our same-restaurant traffic growth allows management to evaluate the performance of our existing restaurant base. We believe this measure is useful for investors because an increase in same-restaurant traffic provides an indicator as to the development of our brand and the effectiveness of our marketing strategy.

System-wide restaurants: the total number of restaurants, including all company-owned and franchise-owned restaurants.

System-wide sales: consists of restaurant sales from our company-owned restaurants and franchise-owned restaurants. We do not recognize the restaurant sales from our franchise-owned restaurants as revenue.

Non-GAAP Financial Measures

To supplement the consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), we use the following non-GAAP measures, which present operating results on an adjusted basis: (i) Adjusted EBITDA, (ii) Adjusted EBITDA margin, (iii) Restaurant level operating profit and (iv) Restaurant level operating profit margin. Our presentation of these non-GAAP measures includes isolating the effects of some items that are either nonrecurring in nature or have no meaningful correlation to our ongoing core operating performance. These supplemental measures of performance are not required by or presented in accordance with GAAP. Management believes these non-GAAP measures provide investors with additional visibility into our operations, facilitate analysis and comparisons of our ongoing business operations because they exclude items that may not be indicative of our ongoing operating performance, help to identify operational trends and allow for greater transparency with respect to key metrics used by Management in our financial and operational decision making. Our non-GAAP measures may not be comparable to similarly titled measures used by other companies and have important limitations as analytical tools. These non-GAAP measures should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP as they may not provide a complete understanding of our performance. These non-GAAP measures should be reviewed in conjunction with our consolidated financial statements prepared in accordance with GAAP.

We use Adjusted EBITDA and Adjusted EBITDA margin (i) as factors in evaluating management’s performance when determining incentive compensation, (ii) to evaluate our operating results and the effectiveness of our business strategies and (iii) internally as benchmarks to compare our performance to that of our competitors.

We use Restaurant level operating profit and Restaurant level operating profit margin (i) to evaluate the performance and profitability of each operating restaurant, individually and in the aggregate, and (ii) to make decisions regarding future spending and other operational decisions.

Adjusted EBITDA: represents Net income before depreciation and amortization, interest expense, income taxes, and items that we do not consider in our evaluation of ongoing core operating performance as identified in the reconciliation of Net income, the most directly comparable measure in accordance with GAAP, to Adjusted EBITDA, included in the section Non-GAAP Financial Measure Reconciliations below.

Adjusted EBITDA Margin: represents Adjusted EBITDA as a percentage of total revenues. See Non-GAAP Financial Measure Reconciliations below for a reconciliation to Net income margin, the most directly comparable GAAP measure.

Restaurant Level Operating Profit: represents restaurant sales, less restaurant operating expenses, which include food and beverage costs, labor and other related expenses, other restaurant operating expenses, pre-opening expenses and occupancy expenses. Restaurant level operating profit excludes corporate-level expenses and other items that we do not consider in the evaluation of the ongoing core operating performance of our restaurants as identified in the reconciliation of Income from operations, the most directly comparable GAAP measure, to Restaurant level operating profit, included in the section Non-GAAP Financial Measure Reconciliations below.

Restaurant Level Operating Profit Margin: represents Restaurant level operating profit as a percentage of restaurant sales. See Non-GAAP Financial Measure Reconciliations below for a reconciliation to Income from operations margin, the most directly comparable GAAP measure.

Selected Operating Data

(1) Reconciliations from Income from operations and Income from operations margin, the most comparable GAAP measures to Restaurant level operating profit and Restaurant level operating profit margin, are set forth in the schedules within the Non-GAAP Financial Measures Reconciliations section below.

(2) Reconciliations from Net income and Net income margin, the most comparable GAAP measures to Adjusted EBITDA and Adjusted EBITDA margin, are set forth in the schedules within the Non-GAAP Financial Measures Reconciliations section below.

Results of Operations

The following table summarizes our results of operations and the percentages of certain items in relation to Total revenues or, where indicated, Restaurant sales for the thirteen and twenty-six weeks ended June 29, 2025 and June 30, 2024, respectively:

(1) As a percentage of restaurant sales.

Restaurant Sales

Restaurant sales represent the aggregate sales of food and beverages, net of discounts, at company-owned restaurants. Restaurant sales in any period are directly influenced by the number of operating weeks in the period, the number of open restaurants, customer traffic and average check. Average check growth is driven by our menu price increases and changes to our menu mix.

The increase in total restaurant sales as compared to the same periods in the prior year was due principally to restaurant sales of (i) $30.1 million and $52.7 million for the thirteen and twenty-six weeks ended June 29, 2025, respectively, from 55 NROs opened between June 30, 2024 and June 29, 2025, (ii) $7.0 million from 19 restaurants acquired from franchisees between June 30, 2024 and June 29, 2025, (iii) menu price increases and (iv) an increase in same-restaurant traffic, partially offset by increased promotional usage.

Franchise Revenues

Franchise revenues are comprised of sales-based royalty fees, system fund contributions and the amortization of upfront initial franchise fees, which are recognized as revenue on a straight-line basis over the term of the franchise agreement. Franchise revenues in any period are directly influenced by the number of open franchise-owned restaurants.

The decrease in franchise revenues during the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods in the prior year was primarily driven by the Company’s acquisitions of 19 franchise-owned restaurants, partially offset by franchise revenues from the nine franchise-owned NROs between June 30, 2024 and June 29, 2025.

Food and Beverage Costs

The components of food and beverage costs at company-owned restaurants are variable by nature, change with sales volume, are impacted by product mix and are subject to increases or decreases in commodity costs.

Food and beverage costs as a percent of restaurant sales increased during the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods in the prior year primarily due to (i) commodity inflation experienced in eggs, coffee, bacon and avocados, and (ii) increased portion size in certain menu items, partially offset by the leverage associated with menu price increases.

Food and beverage costs increased during the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods in the prior year primarily as a result of (i) the 55 NROs and 19 restaurants acquired from franchisees between June 30, 2024 and June 29, 2025, (ii) commodity inflation and (iii) increased portion size of meat in certain menu items.

Labor and Other Related Expenses

Labor and other related expenses are variable by nature and include hourly and management wages, bonuses, payroll taxes, workers’ compensation expense and employee benefits. Factors that influence labor costs include minimum wage and payroll tax legislation, health care costs, the number and performance of our company-owned restaurants and increased competition for qualified staff.

Labor and other related expenses as a percentage of restaurant sales increased during the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods in the prior year primarily as a result of increases in (i) wage rates and (ii) health insurance costs, partially offset by the leverage associated with menu price increases.

The increase in labor and other related expenses during the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods in the prior year was primarily due to (i) the increase in the number of restaurants and related headcount, (ii) wage increases and (iii) increased health insurance costs.

Other Restaurant Operating Expenses

Other restaurant operating expenses consist of marketing and advertising expenses, utilities, insurance and other operating variable expenses incidental to operating company-owned restaurants, such as operating supplies (including paper products, menus and to-go supplies), credit card fees, repairs and maintenance, and third-party delivery services fees.

As a percentage of restaurant sales, the increase in other restaurant operating expenses for the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods in the prior year was primarily due to (i) utilities expenses, (ii) operating supply costs, in particular, to-go supplies and (iii) third-party delivery fees.

The increase in other restaurant operating expenses during the thirteen weeks ended June 29, 2025 as compared to the same period in the prior year was primarily due to the increase in the number of restaurants driving increased expenses including (i) $3.1 million in operating supplies, (ii) $2.2 million related to utilities and repair and maintenance expenses, (iii) $2.0 million in third-party delivery fees, (iv) $0.7 million in credit card fees and (v) $0.4 million in insurance expenses.

The increase in other restaurant operating expenses during the twenty-six weeks ended June 29, 2025 as compared to the same period in the prior year was primarily due to the increase in the number of restaurants driving increased expenses including (i) $5.3 million in operating supplies, (ii) $4.6 million related to utilities and repair and maintenance expenses, (iii) $3.1 million in third-party delivery fees, (iv) $1.6 million in credit card fees, (v) $0.8 million in insurance expenses, (vi) $0.5 million in legal, accounting, and licensing fees and (vii) $0.5 million related to restaurant marketing.

Occupancy Expenses

Occupancy expenses primarily consist of rent expense, property insurance, common area expenses and property taxes.

As a percentage of restaurant sales, the increase in occupancy expenses for the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods in the prior year was primarily due to higher rent expense associated with newer restaurants.

The increase in occupancy expenses during the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods in the prior year was primarily due to the increase in the number of company-owned restaurants.

Pre-opening Expenses

Pre-opening expenses are costs incurred to open new company-owned restaurants. Pre-opening expenses include rent expense, manager salaries, recruiting expenses, employee payroll and training costs, which are recognized in the period in which the expense was incurred. Pre-opening expenses can fluctuate from period to period, based on the number and timing of new company-owned restaurant openings.

The increase in pre-opening expenses during the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods in the prior year was primarily from (i) increases in pre-opening rent and (ii) the higher number of new restaurants opened and under construction.

General and Administrative Expenses

General and administrative expenses primarily consist of costs associated with our corporate and administrative functions that support restaurant development and operations including marketing and advertising costs incurred as well as legal fees, professional fees, stock-based compensation and expenses associated with being a public company, including costs associated with our compliance with the Sarbanes-Oxley Act. General and administrative expenses are impacted by changes in our employee headcount and costs related to strategic and growth initiatives.

The increase in general and administrative expenses during the thirteen weeks ended June 29, 2025 as compared to the same period in the prior year was mainly due to (i) $2.8 million increase in marketing expenses, (ii) $1.9 million in compensation expense from wage increases and additional employee headcount to support growth, (iii) a $0.5 million increase in licenses and fees including information technology related expenses for an increased number of restaurants and (iv) a $0.8 million increase in consulting and other professional services fees.

The increase in general and administrative expenses during the twenty-six weeks ended June 29, 2025 as compared to the same period in the prior year was mainly due to (i) $4.5 million increase in marketing expenses, (ii) $2.0 million in compensation expense from wage increases and additional employee headcount to support growth, (iii) a $1.0 million increase in licenses and fees including information technology related expenses for an increased number of restaurants and (iv) a $0.9 million increase in consulting and other professional services fees.

Depreciation and Amortization

Depreciation and amortization consists of the depreciation of fixed assets, including leasehold improvements, fixtures and equipment and the amortization of definite-lived intangible assets, which are primarily comprised of franchise rights.

The increase in depreciation and amortization during the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods in the prior year is primarily related to depreciating and amortizing the assets of NROs and of acquired restaurants, including reacquired rights from franchisees.

Transaction Expenses, Net

Transaction expenses, net include (i) costs incurred in connection with the acquisition of franchise-owned restaurants, (ii) costs related to certain equity offerings, (iii) costs related to restaurant closures, (iv) gains or losses associated with lease or contract terminations and (v) revaluations of contingent consideration payable to previous stockholders for tax savings generated through the use of federal and state loss carryforwards and general business credits that had been accumulated from operations prior to August 2017.

The increase in Transaction expenses, net during the thirteen weeks ended June 29, 2025 as compared to the same period in the prior year was primarily due to $0.1 million increased costs incurred in connection with the acquisitions of restaurants from our franchisees.

The increase in Transaction expenses, net during the twenty-six weeks ended June 29, 2025 as compared to the same period in the prior year was primarily due to (i) $0.1 million increased costs incurred in connection with the acquisitions of restaurants from our franchisees and (ii) a $0.6 million reduction to contingent consideration liability in the first quarter of 2024, partially offset by $0.3 million of debt modification costs incurred in the first quarter of 2024.

Income from Operations

Income from operations margin decreased during the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods in the prior year primarily due to increases in restaurant level expenses as a percent of restaurant sales, primarily (i) food and beverage cost inflation, (ii) labor and other related expenses including health insurance, (iii) occupancy and preopening rent expense, (iv) other restaurant operating expenses and (v) depreciation and amortization expense driven by restaurant growth, offset in part by leveraging certain general and administrative expenses.

Income from operations decreased during the thirteen and twenty-six weeks ended June 29, 2025 as revenue increases were exceeded by increases in various other costs compared to the same periods in the prior year including (i) labor and related expenses, (ii) food and beverage costs, (iii) other restaurant operating expenses, (iv) occupancy and preopening rent expense, (v) general and administrative expenses and (vi) depreciation and amortization expense.

Interest Expense

Interest expense primarily consists of interest and fees on our outstanding debt and the amortization expense for debt discount and deferred issuance costs.

The increase in interest expense during the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods in the prior year was primarily due to increased borrowings associated with franchise acquisitions.

Other Income, Net

Other income, net includes items deemed to be non-operating based on management’s assessment of the nature of the item in relation to our core operations.

Other income, net decreased during the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods in the prior year primarily due to a reduction in interest income partially offset by insurance recoveries.

Income Tax

Income tax expense primarily consists of various federal and state taxes.

In the United States, a restaurant company employer may claim a credit against its federal income taxes for FICA taxes paid on certain tipped wages (“FICA tax credits”). The level of FICA tax credits is primarily driven by restaurant sales.

Income tax expense during the thirteen and twenty-six weeks ended June 29, 2025 decreased as compared to the same periods in the prior year primarily due to (i) the decrease in income before taxes, (ii) the benefit of FICA tax credits and (iii) the change in the valuation allowance.

The effective income tax rates during the thirteen and twenty-six weeks ended June 29, 2025 increased as compared to the same periods in the prior year was primarily due to (i) the benefit of FICA tax credits and (ii) the change in valuation allowance.

Net Income

Net income and net income margin during the thirteen and twenty-six weeks ended June 29, 2025 decreased as compared to the same periods in the prior year primarily due to the (i) decrease in income from operations as expenses increased at a higher rate than revenue and (ii) increase in interest expense associated with increased borrowings to fund acquisitions, offset partially by the impact of income taxes.

Restaurant Level Operating Profit and Restaurant Level Operating Profit Margin

Restaurant level operating profit margin during the thirteen and twenty-six weeks ended June 29, 2025 decreased as compared to the same periods in the prior year primarily due to (i) inflation across commodities, (ii) increases in restaurant-level wages, (iii) increases in occupancy expense and (iv) increases in preopening expenses. This was partially offset by the leverage associated with menu price.

Restaurant level operating profit for the thirteen and twenty-six weeks ended June 29, 2025 decreased as compared to the same periods in the prior year due to operating expense increases, including (i) labor costs, (ii) food and beverage expenses, (iii) other restaurant operating expenses, (iv) occupancy expense and (v) preopening expenses.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA margin decreased during the thirteen and twenty-six weeks ended June 29, 2025 compared to the same periods in the prior year primarily due to a decrease in restaurant level operating profit margin partially offset by leveraging of general and administrative expenses.

Adjusted EBITDA decreased during the thirteen and twenty-six weeks ended June 29, 2025 as compared to the same periods in the prior year primarily due to (i) the decrease in restaurant level operating profit and (ii) the increase in general and administrative expenses.

Non-GAAP Financial Measures Reconciliations

Adjusted EBITDA and Adjusted EBITDA margin - The following table reconciles Net income and Net income margin, the most directly comparable GAAP measures to Adjusted EBITDA and Adjusted EBITDA margin, for the periods indicated:

(1) Represents costs related to process improvements and strategic initiatives. These costs are recorded within General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income.

(2) Represents non-cash, stock-based compensation expense, net of amounts capitalized, which is recorded within General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income.

(3) Represents professional service costs incurred in connection with the Delaware Voluntary Disclosure Agreement Program related to unclaimed or abandoned property. These costs are recorded in General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income.

(4) Represents costs incurred in connection with the acquisition of franchise-owned restaurants, secondary offering costs and, in 2024, an offsetting gain on release of contingent consideration liability and expenses related to debt.

(5) Represents costs related to the disposal of assets due to retirements, replacements or certain restaurant closures. There were no impairments recognized during the periods presented.

(6) Represents costs incurred for hiring qualified individuals. These costs are recorded within General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income.

(7) Severance costs are recorded in General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income.

(8) Represents the non-cash portion of straight-line rent expense recorded within both Occupancy expenses and General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income.

Restaurant level operating profit and Restaurant level operating profit margin - The following table reconciles Income from operations and Income from operations margin, the most comparable GAAP measures to Restaurant level operating profit and Restaurant level operating profit margin for the periods indicated:

(1) Represents costs incurred in connection with the acquisition of franchise-owned restaurants, secondary offering costs and, in 2024, an offsetting gain on release of contingent consideration liability and expenses related to debt.

(2) Represents costs related to the disposal of assets due to retirements, replacements or certain restaurant closures. There were no impairments recognized during the periods presented.

(3) Represents the non-cash portion of straight-line rent expense recorded within Occupancy expenses on the Consolidated Statements of Operations and Comprehensive Income.

Liquidity and Capital Resources

As of June 29, 2025, we had cash and cash equivalents of $19.2 million and outstanding borrowings under the Credit Facility of $252.8 million, excluding unamortized debt discount and deferred issuance costs. We had availability of $87.4 million under our revolving credit facility of $125.0 million, of which $2.1 million is reserved under letters of credit pursuant to our credit agreement, dated as of October 6, 2021 as amended (“Credit Agreement”). Our principal uses of cash include capital expenditures for the development, acquisition or remodeling of restaurants, lease obligations, debt service payments and strategic infrastructure investments. Our working capital requirements are low due to our restaurants storing minimal inventory and customers pay for their purchases at the time of the sale, which frequently precedes our payment terms with suppliers.

We believe that our cash flow from operations combined with our availability under the Credit Facility and our cash and cash equivalents will be sufficient to meet the Company’s liquidity needs for at least the next 12 months. We anticipate that to the extent that we require additional liquidity, or should we decide to pursue one or more significant acquisitions, the funds would be furnished first through additional indebtedness and thereafter through the issuance of equity. Although we believe that our current level of total available liquidity is sufficient to meet our short-term and long-term liquidity requirements, we regularly evaluate opportunities to improve our liquidity position in order to enhance financial flexibility.

We estimate that our capital expenditures will total approximately $148.0 million to $152.0 million in 2025, not including the capital allocated to franchise acquisitions. This capital is invested primarily in new restaurant projects and planned remodels. We plan to fund the capital expenditures primarily with cash generated from our operating activities as well as with borrowings pursuant to our Credit Agreement.

Summary of Cash Flows

The following table presents a summary of our cash provided by (used in) operating, investing and financing activities for the twenty-six weeks ended June 29, 2025 and June 30, 2024:

Cash provided by operations is our typical source of liquidity used (i) to fund capital expenditures for new restaurants, (ii) to maintain and remodel existing restaurants and (iii) for debt service. Cash provided by operations increased during the twenty-six week period ended June 29, 2025 as compared to the twenty-six week period ended June 30, 2024 primarily due to the increase from (i) the timing of operational payments and (ii) the impact of non-cash charges, offset by the decrease to income from operations.

Cash used in investing activities decreased during the twenty-six weeks ended June 29, 2025 from the twenty-six weeks ended June 30, 2024 due principally to increases in the number of new restaurants and capital projects into which the Company is investing, offset by amounts paid to acquire franchise locations.

Cash provided by financing activities includes borrowings from the Company’s Credit Facility to fund capital projects and related debt issuance costs.

Critical Accounting Estimates

Our discussion and analysis of our financial condition and results of operations is based upon the accompanying unaudited interim consolidated financial statements and notes thereto, which have been prepared in accordance with GAAP. The preparation of these unaudited interim consolidated financial statements and related notes requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on our historical experience, terms of existing contracts, our evaluation of trends in the industry and information available from other outside sources, as appropriate. We evaluate our estimates and judgments on an on-going basis. Our actual results may differ from these estimates. Judgments and uncertainties affecting the application of those policies may result in materially different amounts being reported under different conditions or using different assumptions. There have been no significant changes to our critical accounting policies as disclosed in “Critical Accounting Estimates” in the 2024 Form 10-K.

Recently Issued Accounting Pronouncements

For a discussion of recently issued accounting pronouncements, see Note 2, Summary of Significant Accounting Policies, in the accompanying notes to the unaudited interim consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Commodity and Food Price Risks

We project our full year commodity inflation to range between 5% and 7%.

Except as described above, there have been no material changes to our exposure to market risks as disclosed in the 2024 Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We are responsible for establishing and maintaining disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures also include, without limitation, controls and procedures that are designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Due to the material weaknesses in our internal control over financial reporting discussed below, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 29, 2025, our disclosure controls and procedures were not effective. In light of this fact, our management has performed additional analyses, reconciliations, and other post-closing procedures and has concluded that, notwithstanding the material weaknesses in our internal control over financial reporting, the consolidated financial statements for the periods covered by and included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.

Previously Identified Material Weaknesses

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements would not be prevented or detected on a timely basis.

Refer to the management report on internal control over financial reporting in Part II - Item 9A of the 2024 Form 10-K filed with SEC on March 11, 2025 for a discussion of the material weaknesses, which continue to exist as of June 29, 2025.

Remediation Efforts

In connection with the material weaknesses, management has taken the following remedial actions:

• Hired new and reassigned existing financial reporting, accounting, and information technology leadership with public company experience to enhance public company financial reporting, technical accounting, and information technology services and solutions.
• Augmented financial reporting capabilities by staffing professionals with knowledge and experience in income tax, internal audit, information technology, and legal.
• Established various policies, including a formal delegation of authority policy defining the protocols for reviewing and authorizing commitments, contracts, invoices, and transactions as well as account reconciliation and journal entry policies that provide the framework to ensure the performance of consistent procedures in reconciling general ledger balances to supporting documentation and set the standards for the preparation and review of journal entries.
• Formalized certain roles and reviewed responsibilities, including ensuring appropriate segregation of duties.
• Designed and implemented period-end financial reporting controls, such as controls over the preparation and review of account reconciliations, financial statement disclosures, and the consolidated financial statements, including controls around classification of cash flows and disclosure of noncash items, as well as establishing a formal management Disclosure Committee to review the draft financial statements and disclosures prior to release, including a sub-certification process from various functional groups.
• Enhanced access restrictions for certain users over general ledger journal entries and designed new processes to further automate journal entries and segregate journal entry creation from journal entry approval authority.
• Designed and implemented a comprehensive risk assessment process during second quarter of 2025 to identify risks of material misstatement and ensure our internal control framework has the appropriate business process controls to meet the objectives and address the risks identified.

While management believes that these actions will remediate the material weaknesses, the material weaknesses will not be considered remediated until the applicable controls have operated for a sufficient period of time, and management has concluded, through testing, that these controls are designed and operating effectively. As management continues to

evaluate and improve the Company’s internal control over financial reporting, additional improvements may be implemented, or management may further modify the remediation plan described above.

Changes in Internal Control over Financial Reporting

As noted in the Remediation Efforts section above, there have been changes in the Company’s internal control over financial reporting that occurred during the thirteen weeks ended June 29, 2025 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

Part II - Other Information

Item 1. Legal Proceedings

From time to time, we are involved in various claims and legal actions that arise in the ordinary course of business. We currently do not believe that the ultimate resolution of any of these actions, individually or taken in the aggregate, will have a material adverse effect on our financial position, results of operations, liquidity or capital resources. A significant increase in the number of claims or an increase in amounts owing under successful claims could materially adversely affect our business, financial condition, results of operations and cash flows. See Note 13, Commitments and Contingencies, in the accompanying notes to the unaudited interim consolidated financial statements.

Item 1A. Risk Factors

In addition to the other information discussed in this report, please consider the factors described in Part I, Item 1A., “Risk Factors” in our 2024 Form 10-K, which could materially affect our business, financial condition or future results. There have been no material changes to the risk factors disclosed in our 2024 Form 10-K, but these are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may adversely affect our business, financial condition or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Insider Adoption or Termination of Trading Arrangements:

During the fiscal quarter ended June 29, 2025, none of our directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408, except as described in the table below:

(1) Each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” is intended to satisfy the affirmative defense of Rule 10b5-1(c), as amended (the “Rule”).

(2) Each trading arrangement permits transactions through and including the earliest to occur of (i) the completion of all purchases or sales or the expiration of all of the orders relating to such trades, or (ii) the date listed in the table. Trading arrangements marked as a “Rule 10b5-1 Trading Arrangement” only permits transactions upon the expiration of the applicable mandatory cooling-off period under the Rule.

(3) Ms. Sorensen’s trading plan provides for the sale of up to 246,625 shares after the applicable mandatory cooling-off period subject to limit prices.

Item 6. Exhibits

The exhibits listed in the Exhibits index to this Form 10-Q are incorporated herein by reference.

Exhibit No. Description FILINGS REFERENCED FOR INCORPORATION BY REFERENCE

31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith 31.2 Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith 32.1** Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Furnished herewith (101) The financial information from First Watch Restaurant Group, Inc.’s Quarterly Report on Form 10-Q for the second fiscal quarter ended June 29, 2025, filed on August 5, 2025, formatted in Inline Extensible Business Reporting Language (“iXBRL”) Filed herewith (104) Cover Page Interactive Date File (formatted as iXBRL and contained in Exhibit 101) Filed herewith

• Denotes a management contract or compensatory plan or arrangement.

** This certification is not deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. This certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates them by reference.