The restaurant industry took a hit during the pandemic but is now gradually recovering with the reopening of communities. Restaurants with novel concepts have always garnered the interest of patrons. First Watch Restaurant Group is one such establishment that is set to go public this week. Here are a few things to know about this company:
First Watch Restaurant Group Inc. is scheduled to go public on Friday, October 1. The company will begin trading on NASDAQ under the ticker symbol FWRG. It plans to offer 9.5 million shares at a price range of between $17 and $20 to raise $175.8 million. The IPO will be managed by a group of underwriters led by BofA Securities and Goldman Sachs.
First Watch Restaurant Group is a leader in the daytime dining restaurant segment, which differs from legacy segments as it operates only during daytime hours. First Watch’s restaurants follow one shift, from 7:00 am to 2:30 pm, and one main menu and have a “No Night Shifts Ever” approach.
The company was founded in 1983 and has 9,000 employees. As of June 27, 2021, First Watch had 423 system-wide restaurants across 28 states, of which 335 were company-owned and 88 were operated by franchisees.
Over the five-year period from 2015 to 2019, before the onset of the COVID-19 pandemic, First Watch consistently increased its average unit volume by 25.7% and opened new company-owned restaurants with an average cash-on-cash return of 50.8%.
Amid the pandemic, First Watch had to close all its dining rooms and temporarily suspend operations at its company-owned restaurants. During this time, the company developed and launched a new mobile app to allow customers to order takeout and delivery. It also continued to invest in new company-owned restaurants and develop its future new restaurant openings (NRO) pipeline, leading to a 7.4% increase in its company-owned restaurants from 299 in 2019 to 321 in 2020.
First Watch’s total revenue dropped 21% year-over-year to $342.3 million in 2020. Net loss amounted to $49.6 million for the year. For the first six months of 2021, total revenue doubled to $281 million versus the same period in 2020. The company reported a net income of $1.8 million in 1H21 compared to a net loss of $31.4 million in 1H20. Same-restaurant sales grew around 96% in 1H21 versus 1H20.
According to RKMA, the morning meal, which comprises breakfast and morning snack, has been the only foodservice daypart with consistent year-over-year growth for the last several years. With 102 billion breakfast occasions and 50 billion morning snack occasions in 2019, as per a January 2020 NPD Breakfast Insights report, morning restaurant traffic provides a compelling long-term opportunity for future growth.
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