What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2025-03-11 compared with 2024-03-05 · 81 added, 58 removed, 152 unchanged (48% of the section changed)

6 unchanged sentences

We have built our brand on our commitment to operational excellence, our culinary mission centered around a fresh, continuously evolving menu, and our “You First” culture.

Our focus on one daytime shift enables us to optimize restaurant operations while generating an average unit volume of $2.3 million per restaurant in 2023 in only 7.5 hours per day.

Our focus on one daytime shift enables us to optimize restaurant operations while generating an average unit volume of $2.2 million p er restaurant in 2024 in only 7.5 hours per day.

This daytime focus also provides us with a competitive advantage allowing us to attract and retain employees who are passionate about hospitality and drawn to our “No Night Shifts Ever” approach, among other attractive benefits.

As of December 31, 2023, we had a total of 524 restaurants across 29 states, 425 of which were company-owned and 99 were franchise-owned.

As of December 29, 2024, we had a to tal of 572 restaurants across 29 states, 489 of which were company-owned and 83 were franchise-owned.

We “Follow the Sun”

Every morning, we arrive at the crack of dawn to slice and juice fresh fruits and vegetables, bake muffins, brew our fresh coffee and whip up our French Toast batter from scratch.

Every morning, thousands of our employees arrive at the crack of dawn to slice and juice fresh fruits and vegetables, bake muffins, brew our fresh coffee and whip up our French Toast batter from scratch.

Every menu item is made-to-order and prepared with care.

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As a result, we are proud of the many people-focused awards and accolades we have received over the past few decades, most recently including the following:

• Named the top restaurant brand in Yelp’s inaugural list of the top 50 most-loved brands in the U.S (2023)

• Named a Top 100 Most Loved Workplace® by Newsweek and the Best Practice Institute (2022 and 2023).

In 2023 First Watch was the only restaurant brand recognized.

• Ranked the #1 Most Loved Workplace® in 2024 by Newsweek and the Best Practice Institute

• Recognized with ADP’s Culture at Work Award (2022)

• Ranked # 1 in a five-year longitudinal study of employee surveys on Glassdoor published by William Blair for work/life balance and we were in the top 10 in overall employee satisfaction, among casual dining concepts (2022)

• Named the top restaurant brand in Yelp’s inaugural list of the top 50 most-loved brands in the U.S (2023)

• Ranked # 1 in a five-year study of employee surveys on Glassdoor published by William Blair for work/life balance and we were in the top 10 in overall employee satisfaction, among casual dining concepts (2022)

We also extend our You First culture by giving back to important organizations and causes that are meaningful to our people.

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New Restaurant Openings

As supported by a third-party study, we believe First Watch has the potential for more than 2,200 restaurants in the continental United States.

In 2021, First Watch was recognized by FSR Magazine as the fastest-growing full-service restaurant company in the United States based on unit growth and in 2023, we continued to realize that potential by opening 51 new company-owned and franchise-owned restaurants, which we collectively refer to as “system-wide” restaurants, across 19 states.

Our growth strategy targets an accelerating pace of new system-wide restaurant development with a long-term goal of an annual percentage growth in the low double digits.

We believe First Watch has the potential for more than 2,200 restaurants in the continental United States.

In 2021, First Watch was recognized by FSR Magazine as the fastest-growing full-service restaurant company in the United States based on unit growth and in 2024, we continued to realize that potential by openin g 50 new company-owned and franchise-owned restaurants, which we collectively refer to as “system-wide” restaurants, across 19 states.

Our growth strategy targets an accelerating pace of new system-wide restaurant development with a long-term goal of annual percentage growth in the low double digits.

In selecting new locations, we evaluate specific market characteristics, demographics, traffic patterns, co-tenants and growth potential.

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First Watch’s top 10% of restaurants in terms of sales, span 14 states and 22 designated market areas.

Our new restaurant performance continues to accelerate and we are confident in our ability to continue this growth by elevating both the quality of real estate as well as the introduction of new design features that allow our teams to serve the significant demand.

The average annual sales volumes of our new restaurants outpace the system average and we expect to sustain the performance through quality real estate selection and the introduction of features and operational practices designed to efficiently serve more demand.

Acquisitions of Franchise-Owned Restaurants

Our long-term growth strategy includes the acquisitions of First Watch restaurants operated by certain of our franchisees.

To that end, during 2023, we acquired 23 operating restaurants along with development and territory rights from four franchisees.

In addition, shortly following the end of 2023, we announced our agreement to acquire 21 restaurants from our largest franchisee.

To that end, during 2024, we acquired 22 o perating restaurants along with development and territory rights in two separate transactions.

We have also signed agreements to acquire a total of 19 additional restaurants from franchisees.

See Note 22, Subsequent Events , in the accompanying notes to the consolidated financial statements included in Item 8 of Part II of this Form 10-K for additional information.

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In 2024 and 2023, our total off-premises sales accounted for 17.5% and 18.3%, respectively, of our total restaurant sales.

While these sales channels have corrected from anomalous highs during 2020 and 2021 due to the COVID-19 pandemic, this still reflects a significant portion of our business and has remained elevated relative to 2019 when off-premises sales only reflected 6.7% of our total restaurant sales.

◦ In-restaurant dining sales continue to strengthen, indicating continued customer demand for experiences and connection.

In 2022 we implemented kitchen display screens in all company-owned restaurants to simplify the employee experience and improve back-of house efficiency.

In 2022 we implemented kitchen display screens in all company-owned

restaurants to simplify the employee experience and improve back-of house efficiency.

Along with many other operational initiatives, processes and procedures, we continue to see opportunity to use technology to elevate the customer experience and simplify tasks for our teams.

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• Continued Menu Innovation.

We constantly evolve our on-trend menu which highlights our commitment to quality and freshness and is also operationally efficient.

When it comes to sourcing, we are guided by a core philosophy:

We constantly evolve our on-trend menu which highlights quality and freshness and is operationally efficient.

When it comes to sourcing our produce, we are guided by a core philosophy:

“Follow the Sun.” Our five highly anticipated seasonal menus drive customer frequency.

This means that we welcome each season into our menu with exceptional ingredients harvested when they are most flavorful and fresh.

In addition, successful new platform introductions such as our Fresh Juice program, our Shareables, our alcohol program and our premium iced coffees add incremental revenue opportunities and capitalize on growing trends.

This means that we welcome each season with exceptional ingredients harvested when they are most flavorful and fresh.

In addition, successful new platform introductions such as our Fresh Juice program, our Shareables, our alcohol program and our premium iced coffees add incremental sales opportunities and capitalize on growing trends.

◦ Offer Alcohol as Only First Watch Can .

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• Increasing Our Brand Awareness.

For 40 years, our awareness has grown primarily through word-of-mouth as our service, menu and environment created loyal fans.

For over 40 years, our awareness has grown primarily through word-of-mouth as our service, menu and environment created loyal fans.

While we believe that organic growth of awareness contributes to our local feel, we also recognize the potential of strategically marketing in appropriate channels to accelerate our brand awareness.

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Restaurant Staff

As of December 31, 2023, we had approximately 14,000 employees.

As of December 29, 2024, we had more than 15,000 restaurant employees.

None of our employees are part of a collective bargaining agreement and based upon independent surveys and our internal evaluations, we believe our “You First” organizational culture continues to foster overall favorable relations with our employees.

Each restaurant operates with a staff of approximately 20 to 30 team members led by general manager(s).

Each restaurant operates with a staff of approximately 30 team members led by general manager(s).

During a restaurant’s 7:00 a.m.

shift, our staff focus on gracious service, food preparation, order accuracy and “instagrammable” plating.

We employ a narrow span of control, which we believe contributes to the consistency of our restaurants’ performance across our system.

The general managers interview each applicant and identify motivated employees who are friendly, service oriented, eager to prepare high-quality food and a fit for our “You First” culture.

General managers interview each applicant and identify motivated employees who are friendly, service oriented, eager to prepare high-quality food and a fit for our “You First” culture.

We employ a narrow span of supervisory control, which we believe contributes to the consistency of our restaurants’ performance across our system.

Our training programs share our legacy and culture of operating excellence.

We have established a training facility at our corporate headquarters named the F.A.R.M.

(“First Watch Academy of Restaurant Management”), to which we invite managers-in-training for a week-long brand experience where they learn everything from our history and cultural pillars to leadership and management tools.

We have a training facility at our corporate headquarters named the F.A.R.M.

(“First Watch Academy of Restaurant Management”), to which we invite managers-in-training for a week-long immersive brand experience where we teach everything from our history and cultural pillars to leadership and management tools.

We have enhanced this training program to also focus on building a more diverse and inclusive team.

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Franchise Program

As of December 31, 2023, we had 11 franchisees that operated 99 restaurants and our existing franchisees had 18 total new restaurant development obligations.

As of December 29, 2024, we ha d 11 franchisees that operat ed 83 rest aurants and our existing franchisees had 29 total new restaurant development obligations.

Typically, our franchise agreements provide an initial term of 10 years with additional renewal terms that total 10 years subject to various conditions that include upgrades to the restaurant facility and brand image.

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First Watch has a simple mission statement based on its “You First” culture—“Making days brighter at every opportunity.” We have been people-focused from our inception as we have always believed our employees are our greatest asset.

We believe that putting our employees first, in turn, leads them to put customers first.

We believe the Company’s culture plays a significant role in higher retention of all employees.

This culture was also a key factor in the Company’s achievement of top 50 status in Newsweek’s 2023 Top 100 Most Loved Workplaces, a designation that was a result of an assessment of First Watch’s people practices along with an independent survey of approximately 1,000 of our employees.

At First Watch, we are committed to making days brighter by creating a culture where our teams and customers feel valued and celebrated for who they are and the differences they bring to the table.

We also embrace the fact that diversity goes hand in hand with inclusion.

With our core belief to “Just Be Kind,” we endeavor to provide our people with the opportunity to contribute at the highest level and we empower diverse voices to ensure everyone can belong, thrive and “follow the sun” to reach their full potential.

We believe in fostering an environment where all employees feel valued and heard, and we provide employees with various channels to provide regular feedback, including surveys, meetings and direct communication.

In 2023, CEO and President, Chris Tomasso, Chief People Officer, Laura Sorensen and Chief Operations Officer, Dan Jones, hosted nineteen separate 90 minute calls with hourly employees across the country for their second annual W.H.Y.

We believe that putting our employees first, in turn, leads them to put customers first and we are confident that our people-centric culture plays a significant role in retaining our employees.

This culture was also a key factor in the Company’s achievement of being recognized as 2024’s #1 Most Loved Workplace in the United States by Newsweek and the Best Practice Institute.

This is the third consecutive year in which the Company has been included in Newsweek’s Top 100 Most Loved Workplaces®, a designation that was a result of an assessment of First Watch’s people practices along with an independent survey of approximately 1,000 of our employees.

Listening to Our Employees

We believe in fostering an environment where all employees feel valued and heard, and we furnish employees with various communication channels to provide regular feedback, including surveys, meetings, and, most importantly, direct communication with Company leadership.

In 2024, CEO and President, Chris Tomasso, Chief People Officer, Laura Sorensen and Chief Operations Officer, Dan Jones, hosted twenty-four separate 90 minute calls with hourly employees across the country for their fourth annual W.H.Y.

Tour – their “We Hear You” listening tour.

The purpose of the in-depth sessions was to learn more about the issues most meaningful to our hourly workforce.

As a result of this tour, the Company was able to take swift action on the most meaningful issues.

New employee benefits, practices and operational tools have been introduced as a direct result of feedback from each tour, reinforcing the Company’s culture of listening to its employees and taking action on the issues that matter the most to them.

We believe our diverse teams reflect the wide diversity of our customers across the U.S., allowing us to better anticipate market trends and address the needs of our customers.

And while our work is ongoing, we’re dedicated to building on our “You First” commitment and unlocking amazing possibilities for each team member and the communities we serve.

The purpose of these in-depth sessions is to learn more about the issues most meaningful to our hourly workforce.

As a result of these tours, the Company has been able to take swift action on the issues that surfaced, resulting in positive changes for both employees and customers.

New menu changes, employee benefits, training, operational practices and more efficient tools have been introduced as a direct result of feedback from each annual tour, reinforcing the Company’s culture of listening to its employees and taking action on the issues that matter the most to them.

Taking Care of Our Employees

At First Watch, our people are our purpose, which is why we continue to invest in benefits and programs.

We operate on a “No Nights Ever” model and work to get our restaurant employees “out the door by four”– which allows our teams to enjoy evenings with their family and friends, and an improved quality of life.

This one-shift model provides our employees with a work-life balance that is simply out of reach for most restaurant industry employees.

In addition to this flexibility, we support our employees with healthcare benefits, a 401(k) plan, tuition reimbursement, family leave and other assistance, including but not limited to:

• Backup childcare and eldercare available for all employees, at all levels

• Our “You First” Emergency Assistance Fund

• A text-based telemedicine platform with no out-of-pocket expenses, for all employees regardless of insurance plan

• Complimentary access to the Calm App (for meditation, relaxation and sleep) for all employees and five of their loved ones

• No-cost high school diploma program

• Discounts on thousands of items from sporting tickets and computers to cars and daycare

• Pet insurance

In 2020, we created the “You First” Emergency Assistance Fund, which provides financial support to employees and their immediate families during times of significant hardship following the impacts of qualifying disasters.

A portion of each kid’s meal sold by our restaurants benefits this program.

Since its inception, this fund has provided employees with over with over $1 million dollars in tax-free hardship grants.

Most recently the fund was leveraged to assist hundreds of our Southeast-based employees after the hurricanes of 2024 caused flooding and wind damage in Florida, Georgia, North and South Carolina.

Including Our Employees

At First Watch, we are committed to making days brighter by creating a culture where our teams and our customers feel valued and celebrated for who they are and the differences they bring to the table.

With our mission of “Making days brighter at Every opportunity”, we endeavor to provide all employees with the opportunity to contribute at the highest level to ensure everyone can belong, thrive, and “Follow the Sun” to reach their full potential.

We believe the composition of our teams reflect the diversity of our restaurant communities across the country, allowing us to better anticipate market trends and address the needs of our customers.

And while our work is ongoing, we’re dedicated to building on our “You First” commitment and unlocking possibilities for each team member and the communities we serve.

First Watch works with an outside consultant to complete an annual assessment to both build and benchmark our policies, practices and representation.

This commitment to diversity, inclusion, and fair and equal representation of underrepresented or minority groups is demonstrated throughout all levels of the organization (based on self-reported information as of February 19, 2023):

• 50% of the non-employee members of our Board of Directors are women, and our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are each chaired by a woman;

• 25% of our non-employee directors are from an underrepresented group as it relates to race/ethnicity;

• 33% of the members of our executive leadership team are women;

• 53% of our workforce are women;

• 57% of our workforce belong to an underrepresented or minority group as it relates to race/ethnicity.

In 2020, we developed and launched an annual campaign, branded #beabetterhuman, which has taken our people-focused approach to a new level.

We turned participation in the #beabetterhuman campaign into an opportunity for employees to give back to the community.

The #beabetterhuman initiative included a six-part live, interactive web series tackling sensitive topics such as unconscious bias, privilege and mental health.

The #beabetterhuman campaign was designed to educate our entire workforce, raise awareness and influence change.

We continue to build upon the success of the program with training on the program for new managers and an ongoing #beabetterhuman series on Facebook, Instagram and Glassdoor highlighting diverse employees within the restaurants and their unique and inspiring stories.

(Race Inclusion and Support Exchange) Council was created to dialogue with high performing diverse leaders on how to best advance the Company’s diversity efforts.

As a result of ideas that the R.I.S.E.

Council surfaced, The Rising 20, a new mentor program was established as an important step in the #beabetterhuman campaign to help accelerate the development and advancement of under-represented groups within First Watch.

In this mentoring program, employees are partnered with a senior leader in the organization for a six-month guided mentorship journey targeting personal development and professional growth.

In addition, the program includes a self-assessment and career goal setting workshops.

The #beabetterhuman initiative is comprised of monthly live, interactive in-person and online workshops fostering personal and professional development.

The #beabetterhuman campaign was designed to educate and develop our workforce, raise awareness and influence change.

We continue to build upon the success of the program with training for new managers and an ongoing #beabetterhuman series on Facebook, Instagram and Glassdoor highlighting employees within the restaurants and their unique and inspiring stories.

Our #beabetterhuman campaign also inspired the opportunity for employees to give back to the community through our executive-sponsored and employee-led Kale Krew, which coordinates multiple volunteer opportunities annually.

Developing Our Employees

Professional development and growth are a way of life at First Watch.

Since 2022, more than 85% of the 510 employees promoted to general manager at our corporate-owned restaurants were promoted from within.

The average tenures for our directors of operations, regional vice presidents and field operations vice presidents are 8 years, 13 years and 19 years, respectively.

First Watch takes a 360-degree personal/professional approach to career advancement and development.

We are constantly iterating and promoting career advancement opportunities for our people.

Specific programs include:

• Our certified Black Hat and Black Apron program encourages leadership development for back-of-house and front-of-house employees through financial and growth incentives.

• A certified training general manager and restaurant program provides additional financial and growth opportunities for aspiring leaders, enabling us to promote more employees from within our restaurants and ensure we are delivering a best-in-class training experience to all new hires.

• Regional “Come Grow With Us” events provide hourly employees who are interested in leadership the chance to learn about growth and development and get on the fast track to management.

• Established in 2018, our First Watch Academy of Restaurant Management immerses new restaurant managers in our You First culture and leverages Company subject matter experts to educate these leaders on a variety of essential topics, including leadership behaviors.

To date, nearly 1,000 high-potential leaders have attended the week-long sessions that take place throughout the year.

We prioritize personal and professional growth because it’s simply the right thing to do and it’s part of our culture.

However, it also makes our aggressive growth plans possible.

With over 100 new restaurants in our real estate development pipeline, we need a robust GM-ready talent bench.

Our ongoing career growth opportunities, along with our culture and hours, are a key component to our employee value proposition, which fuels our ability to both attract and retain great talent.

Retaining Our Employees

All of these aspects, and many more, contribute to our award-winning culture and employee retention.

Our turnover sits well below the industry average and has improved sequentially over the last two years for both managers and hourly team members, enabling us to provide consistent and memorable dining experiences for our customers.

Experienced, Passionate Leadership Team and Deep Bench of Talent

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We have a deep bench of talent throughout the organization.

Our executives and key employees average more than 15 years of industry experience and our directors of operations have an average tenure at First Watch of approximately ten years.

Our executives and key employees average more than 15 years of industry experience and our directors of operations have an average tenure at First Watch of approximately 10 years.

In addition, our restaurant staff includes hundreds of fully-trained, tested, high-performing managers throughout our system who are poised to step into the general manager role as we execute our growth strategy and open new restaurants.

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As consumers increasingly seek higher quality breakfast, brunch and lunch experiences, we believe we are well-positioned to compete with a wide range of national, regional and local establishments that operate during our hours of operation.

More directly, we do not believe there is a comparable offering within our segment that operates at the scale of First Watch

and we view our primary competition as a network of independent restaurants that also serve breakfast and lunch in neighborhoods across the United States.

More directly, we do not believe there is a comparable offering within our segment that operates at the scale of First Watch and we view our primary competition as a network of independent restaurants that also serve breakfast and lunch in neighborhoods across the United States.

Our quarterly results of operations are subject to seasonal fluctuations.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business