First Watch CEO Chris Tomasso described Q1 as one of the best quarters he can remember in his 17 years at the company.
Same-store sales increased 12.9 percent year-over-year, lapping 21.9 percent growth in 2022. Traffic increased 5.1 percent, outpacing the brand’s competition. Adjusted EBITDA was $27.4 million, up 42 percent from last year. First Watch experienced these results despite a difficult March comparison. There wasn’t a deceleration in sales and average weekly traffic held steady throughout the quarter.
If Tomasso were to pick one downside in Q1, it’d be the softening of off-premises. CFO Mel Hope said the decline has been “pretty sequential” since the middle of the quarter. The company attributed the decrease to consumers’ tightening their wallets.
“Let’s just be honest, the delivery, third-party delivery occasion is very expensive,” Tomasso said during the brand’s Q1 earnings call. ” … And not just with us, by the way, as you’ve seen with almost everybody in the industry where the consumer is starting to pull back. It’s a discretionary occasion. And I think that’s where you’re starting to see it.”
Tomasso isn’t surprised delivery is first on the chopping block amid financial pressure. At any rate, the company is more than okay with the shift because it’s witnessing growing dining room traffic. Inside restaurants, First Watch isn’t seeing any notable check management. Beverage attachment is up and shareables have remained steady. Alcohol is in 87 percent of restaurants, slightly up from Q4, and it’s mixing 6 percent.