Earnings call transcript Q4 2022

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Operator

Good morning and welcome to the First Watch Restaurant Group Fourth Quarter 2022 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Steve Marotta, Vice President of Investor Relations. ahead. go Please,

Steve Marotta

issued and and Watch's everyone, at documents and joined today Form year the First here Financial fourth with for Good and XX-K its quarter Executive welcome. be annual Officer can investors.firstwatch.com. First fiscal Watch morning This Chief Mel on Tomasso; These earnings and by found release Officer, the GlobeNewswire morning, XXXX Hope. I'm its filed President, SEC. Chief on Chris report

housekeeping few will differ a the cover before that introducing subject call me Let results risks materially cause conference This matters statements. that include are to Chris. these company's actual could statements forward-looking from and to various uncertainties

operations, expenses. include, strategies on statements our Such without earnings performance filings with statements such of Any Factor report concerning financial SEC, limitation, the XX-K. the our company's the in condition, cautionary should release conjunction and with conditions and annual in Form growth Risk including be and in considered future statements the and statements its company's the industry disclosure

whether assumes statements update by except may required no to result future a or these obligation as be new forward-looking otherwise, law. Watch developments of First information, as

the measures, remarks EBITDA measures operating to include to management's reconciliation including earnings non-GAAP these margin. comparable filed the restaurant company's of adjusted references release Lastly, Investors profit, the restaurant results EBITDA profit various will operating and non-GAAP level this adjusted in contained today level margin, morning. should GAAP review

turn like with And that, would it over Chris. to to I

Chris Tomasso

same-restaurant most growth when outperform the XXXX of a Watch. to another of year and XXXX. First to XX.X% start, morning. sales key significantly To versus we number was Good continued in XXXX in stellar Steve. areas; perhaps compared XX.X% Thanks, industry for

when group comp to XXXX. X.X% compared versus Importantly, same-restaurant and by growth was X.X% XXXX traffic this led

increased X.X%. $XXX.X to and EBITDA Total $XXX.X XX.X% from increased adjusted year-over-year, $XXX.X XX.X% million. -- sales increased growing and million million revenues year-over-year System-wide

consider whole as you X% Black a achieved the noteworthy traffic growth industry even of same-restaurant amidst Box. and our year-over-year are metrics that All challenging a they macro experienced more to when the of during when according declines environment were year

traffic represents appeal health consumer of overall concept. of To the truest share a and us, strong measure the

our growth the another great is desired achieve growth of indication further the our daytime our that recognize pioneer targets. traffic confidence Watch the awareness and dining our offering highly driving that segment, brand. in our the continued is consistent to of consumers year-over-year are strategies gives As It yet provides and long-term ability us evidence that growing First results our differentiated

on especially what proud delivering teams of XXXX. new our openings accomplished I'm XX the restaurant development front, in

company-owned targets. XXXX annualized XX restaurants opened sales about comp their AUVs X% AUV projected of above that first above achieving year $X are million Our our well and in are group

those geographies, all to across of exciting before. off restaurants, that, these $XX,XXX. was to notably, as More be is volumes us shy sales record seeing they mature. than our experienced just appear we've volumes continue higher to weekly ever of XXXX, to Prior are building most What's we

new a restaurant we one in just It week in that Virginia. that $XX,XXX. had like about of in mind, share under I'd opened With to November sales

sales in next new restaurant to previous three above $XX,XXX, this at a well Year-to-date, on average weekly its went the record more the operation. nearly the sales Over of times, than that team company's of week weeks, break record. more few culminating fifth sales $XXX,XXX has there weekly in

sales well. are break record setting in threshold Since $XX,XXX XXXX our anomaly. sales weekly higher others that not this an These seen as we've opening, vintage

million first sticky. volumes an We $X vintage our AUVs restaurants be still be $X one appear and amazing in accomplishment will from for be will in Our their one XXXX strong shift above sure. new our are to X.X exceptional Achieving hour of group daily sales restaurants from well that our trending believe high these million XXXX restaurant. comp

traffic growth group's the consumer opportunity Considering foreseeable to now clear and is and performance demand. as exceptional sales abundantly led consistent our coupled a the for restaurants of with company that the biggest comp it serve future our becomes more new

So our position be don't entire It's to it and focused organization is it. we an on take granted. for enviable

team meeting in ensure appeal years by many the has brand Our us consumer's our position the to worked everchanging put and broadening diligently to over relevance, this needs. evolving

through sexy they upside Admittedly, are have tremendous to and potential and today. key them you driven lead AUVs or nonetheless look minimize transformational necessarily to I'll robots shiny eliminate are higher efforts phenomenon. the of We've do restaurants with ChatGPT or none and and that initiatives some in designed by through unlocking our these walk but aren't technology,

That's sales the long-term us arrive to push decision our find to growth customers to dining wait and for continue busy outsized heights. our a new go at demand This our is unfulfilled room a and restaurants time elsewhere. make an doorstep that lengthy when represents opportunity to traffic to and at

In are five and focused strategic helping of that this of front house back both to house primary XXXX, are we serve on initiatives demand.

second We're serve casual more fast First, investing casual our locations often units concepts failed standalone more eight restaurants of evolving from have and larger number demand, closed evolve. taking in real a to growing to opening generation estate sites and over that strategy. and

generate locations our new factor our are volumes higher invested footprints or on in these returns to ability of maintaining larger while capital. The improving one

in in rare this cannibalization little core markets. the and excess when also means been We cannibalization seen to demand new have has strategically no underwritten forma. to planned our pro as a when infilling even restaurant we instances serve see And

make more at and consistent process in hours in house kitchens allow faster peak volumes We're energy pancakes every early and simultaneously lines that cook we're efficient time. that more upgrades. of dining time enhancements ensure of same our wider phases sandwiches the or the cook for to And ovens in in time. double double grills kitchen to room. the a both leveraging smart accommodate and equipment offprem installing We're many in dishwashers of back investing Second,

System schedule of of piece us domestic setting continue company-owned in at Third, completed our system. all Display and the scale We end we Systems in throughput KDS or to of is higher driving critical our restaurants to importantly to goal more KDS to up X,XXX and Kitchen a the rollout ahead KDS. – the locations. optimize our XXXX of our

free dedicated key house. us specialization. of specialized and position as role We're Fourth, role positions in dedicated beverage the testing expeditor such We're to a approach some to back more functions allow job a a the particularly leveraging of this in drive more been see that allowed pleased servers up from We've to front to has serve and servers the customer in satisfaction. our to restaurants house. testing elevated tables more time specialization our the

comes the to upon by customers for waitlist pain room dining system. optimizing leveraging perspective which using customers' management our both Fifth, points the system to what From alleviate house call builds employees. life experience we our of and technology front that

waitlist allowing dining more behavior these increasing to Similar Up way we to showcasing utilization, our heart XX% management our on of track days. consumer in weekend key demand serving as of system traffic turns, flows allows demand. of to seat abandonment of the is waitlist us focus the reducing front it's our this table This the of through view our rooms; us house. kitchens, heart to frankly and KDS on our the magnitude system,

help the have every demand growing initiatives to food only do ensure for us these in time. experience they waste serve more our fantastic tools every they deliver to efficiently not reduce First offerings need allow a the our And and teams customer Watch

scores times our than more served before customers we year wait strong held averages. prior the in yet customer industry ever XXXX satisfaction were our and above shorter than In actually and

business a to XXXX marks XXth a old a our establish and as brand year XX-year itself concept evolution. growth in without dedication doesn't

of meeting choice. that to the marketplace First as that of rests to an employer adapting fuels system is on and success and success done throughout evolving Watch getting the belief preferences started. each First everchanging our employee We we've strengthen consumer Watch our much an position Our just strength know my

already and never we excited and part been parental to that Just serving organization. enhancements this more and business. We're towards incremental to out. be of focus more together several who including on demand on door. prepared to growth our customer, in us exciting knocking they're specifically our is acquire behind the all last to not extended benefits, year health paying another working towards serving operators announced the I've deliver well-being. the seeking We're best We're some week, mental person the leave of of programs

it. First Watch and has we're sticking a plan to

the And to to fourth quarter the call now, Mel detail. review in greater Mel? to I'd like turn over

Mel Hope

Chris. Thanks, January expanding on and our on operational on start we focusing by fourth that quarter to announced the performance X. results I'm going

of which revenues XXXX. is sales growth in same-restaurant quarter then, the $XXX.X fourth over quarter shared of we were increase XX.X% million, an wasX.X%. As Total the

As as quarter our closed a off start Hurricane Ian X we got indicated to call, during earnings of XX fourth November temporarily slow our restaurants. the

quarter, picked of traffic back middle lingering despite Through the up impacts hurricane. of the the some

However, estimate our We points million combination by shift the basis Storm that of $X.X events the this restaurant traffic our a of markets. impacted quarter, week XXX traffic sales. during holiday Elliott negatively Winter and almost both in last or all of reduced our about roughly

beverage fourth costs were and quarter. of sales the in XX.X% Our food

We bacon; the are XX% where continue top basket, to which potatoes, and our about market inflation our comprise coffee, basket. commodities across of avocados experience X.X% X eggs, about of

how to we full add believe a a our address middle egg is been understand approach has the supply. year. this eggs about recovery the little it's bit that that Given around industry we color to projected hot production of We more helpful topic,

They prior two annual potatoes serve on well reliable of about agreements our and our sight protecting These As year, XX% volatility our price the food associated by the pricing costs. a market. severe we're the costs of and with together which of us from most eggs us also purchasing these line supply give up spot commodities, fixed securing in agreement. again make the under company

and In were part inflation XX.X% fourth percent to and some was of traffic. quarter, up XXXX. been the and from inefficiencies of in sales The we our around sales our year-over-year XX.X% due of XX.X% the hourly related of certain the management. quarter labor far, fourth in processes to trending has dashboards in quarter as reaction XXXX, labor our upgraded labor improved XX.X% of Labor in favorably. a first fourth in January increase the other and Thus the choppy of quarter of quarter third impact expenses

margin quarter I performance profit XXXX. specifically, in similar margin mature the million which noncomp $X.Xmillion which to our the want Our out were was points restaurants of of $X.X comp operating potential XXX a quarter, we units. restaurant of fourth most about call of basis our are for obviously for restaurants, the our and reach had quarter the preopening $XX.Xmillion XXX XX.X%. In costs level to believe improvement XX with all

negotiated place deliberately our to opening earlier landlords year. we schedule, Our as not only alongside bring the the positions to about enter work with to access developer's units better realizing our development preopening Earlier but meet margins increased also possible. the to contractors restaurants rent alone in the new on path mature sooner $XXX,XXX year-over-year, and us following earliest more dates

fourth in and due million the X.X%. margin We have Adjusted adjusted $XX.X million unrealized quarter to aforementioned about storms the shifts. we $X.X impacts EBITDA EBITDA was a the believe holiday in with of the of

franchise were the and We which expenses, company-owned restaurants million opened when the and quarter, of which quarter from of during the our IPO. the year five of $XX.X new General a XX opened million, administrative stock time incurred by were compensation at we was down expense last XX partners. fourth $X.X of

net on income November registration $XXX,XXX our X. of in shelf Our incurred with filed costs connection includes about

more Chris' them. to our I'm our in and full that deliver teams the through time climate remarkable of overcame year comment XX-K. challenging in But that year First not back of earnings our Watch cannot spend frankly, economic be I I listeners are growth reiterate at taking would release and to another going a results proud

which the a in Given statement to in quarter softer we're quarter that turn ends holiday XXXX, calendar The than the negatively of expected things our experiencing fast. my I was us that several want early of fourth first to fourth significant in events, due few earlier share impacted the what broke the mentioned we benefited out March first quarter I quarter and on shift, earlier, gate about XX.

comps was quarter, same-restaurant was the period quarter our by the growth the of traffic variant first I'd and respectively. that second in began the and The impacted you X.X% current formidable last year. to same-restaurant stronger rolling the we of lapping and remind sales XXXX of positively such, comparison. Omicron Through our of XX.X% a poses much beginning sales March like as month also

have during the system-wide we place. in in X.X% we We increase first for we the January of XXXX increased quarter, far we price week price opened of X.X% the a Averaging over quarter fifth the quarter, the in took took Early rolled and restaurants thus X.X% in those, quarter. increase. the six

reminder things a keep year just fiscal a to And is finally us. for as and interesting, XXXX XX-week

be we sales quarter fourth and expect adjusted holiday quarter EBITDA. impact a roughly the to be Our of week extra million will in XX-week in $X.X and million that $XX.X

follows. Our full as year outlook is

to We the traffic year. expect XXXX X% same-restaurant in growth sales of growth for X% on positive built

revenue total to XX% expect EBITDA XXrd range both in the and We growth range of of include $XX of $XX the week. the adjusted to in these million XX% numbers million,

commodity expect X% to of and hourly X% XX%. inflation labor X% of to We inflation

back in restaurants XX and we to to XX cadence expect restaurants openings of be the in XX more the similar year XXXX. to our heavily to franchise-owned expect between and these company-owned We open XX half and weighted

to company-owned in system-wide XXXX. restaurants, plan resulting in to total XX three new We a also net XX restaurants close of

increasing expenditures $XXX the we openings, expect $XXX new million of between million. Given restaurant pace capital and

In number of house and also be in increase investing or footage, to outdoor continuing to we're will accommodate addition patios, projects square volumes. sales indoor of to larger our with the invest equipment which back sites more year, bars, in the expanded higher into this we

We have our on cost restaurants, $X.X which of million new improvement average net in basis. the a expected seen increase restaurant build-out allowances per now an tenant of

delivers XX% operating restaurants in planned We XX%. their of cash-on-cash This $X.X that third of margin sales XX% in restaurant with operation third return in million expect year a above these to range year. in average to the level profit

figures post quarterly website. in Relations We've investor updated our economic on the that unit these information we Investor

while to influence that our of to to quarterly considerations of We planning trend adjusted I don't to XXXX. And the expect going our during some we XX% be moment blended share tax XX% a XXXX. rate results, want guide to to do in EBITDA are our growth take

just between of the allocated I that the actions first in of is half gap comparison formidable quarter mentioned While given EBITDA well half March three over growth less represent of as the earlier. will the our year, first allocation adjusted that week pricing the the as

our may quarter year-ago. and ramp cause roughly Similarly, that investment preopening of EBITDA in the third the quarter, period be both a G&A adjusted equal expenses to same planned to during

sales These about and double-digits low financial percentage targets Finally, long-term unit which adjusted EBITDA like I'd growth in growth also to have mid-teens. of company's X.X%, sales in not percentage changed. growth reiterate the annual the include restaurant annual same-restaurant the

year, our For the on further visit detail on fourth deck quarter or materials our Relations website. fiscal please Investor the supplemental

going time, line to this at And ask the I'm operator to your for questions. open the

Operator

now will of session. question-and-answer Please from Barish our the first question [Operator begin Jefferies. Instructions] Andy will We come go ahead. And

Andy Barish

Hey, guys.

Chris Tomasso

Andy. morning, Good

Andy Barish

out Can everyone. year remind the pricing morning, you for you're expecting the what it us on rolls year just for full XXXX? Good the as

Mel Hope

until the plans the first we year after in price our visited for and we don't what it in rolled announce out. really year pricing historically, of So quarter. the are middle the We have

Andy Barish

other in we given thus peaking non-comp basis the things widened level we a then Mel, that gap less Is bit like number comp move can digging little in restaurant a from and to margin ramp-up more just the see non-comp growth that between as and just point unit that and drag XQ. looks XXX your from stores forward? bit those little And a it's

Mel Hope

restaurants. on outperformance that for long long And average on future, grow above continuing every similar see to past basis. should restaurants on XX% immediate we're of as reminder, they're so the kind trying as volume, Andy we as the just to those we've sort margin we're high the before -- of of that to are XX expect see as non-comp kind the what I to more think extremely that a the is in at relative also restaurants line, something to there's year top always may an dollars I see as in about kind those think level a continue talked because think in of I that Those we that. over-indexing we're

close we're and pace going know as gap opportunity. think we openings. I represents long as don't too with I to our spread the that the the that keep that maturity much

Andy Barish

I that to these finally, in that obviously. restaurants of a just labor just intentional does the of that to I get and And seeing lot assume up show is you're some great imagine off starts

flesh just out that us? So bit a little for

Mel Hope

higher Yeah. We a run we of have. labor in result restaurants those new as openings

We But I most the well. have food for labor right, the more So part carrying right? elevated those as food you costs have think impact biggest heavier in is restaurants. around some waste, you're

Andy Barish

guys. Thanks Okay.

Operator

ahead. comes from Barclays. question next Jeff Bernstein of go Please The

Unidentified Analyst

may Jeff. This Thanks restaurant willing to guardrails more wanted and morning. margins threshold on of margins? is question. time? on more some of were longer-term pull a guys XXXX. persistent forward line, needed taking for you touch on what the Hi. minimum whatever to is Appreciate to and normal Thanks. be keep is into would just kind you year, willing to Like line for the take levers have And But remains to top for means guess I if your provided the bottom restaurant Good going protect a outlook that additional then of to expected? just Parekh like, can what maybe the guidance. what What be than in year-over-year? you're sales what flat challenged and inflation margins embedded are that level draw be you pricing I pricing those the And over

Mel Hope

performance, terms our comp that into non-comp of single growing lot the but that think again, our to that to XX% assumptions generally question. inflation, sufficient try gets reaching and and the restaurant-level about not if built the with pricing. But only are to And take built on restaurants year, pricing targeted range is necessary. around our a has XX% the we Historically, at of detail. look is, defend operating in which are into if tend what group, is that in of We'll that in guidance that offset budgets a profit, one there's those then kind newer, at that in So company we think the middle I that now, right margins.

Unidentified Analyst

that. Appreciate it. Got

Operator

Chris The go Please Stifel. ahead. comes O'Cull next from question of

Chris O'Cull

primarily And inflation that catch I seems the Mel, what X% than XX% from level of the companies. you company to this to related mentioned wages? up kind to Thanks. higher That trying restaurant increase labor year. is to we've heard market believe other for if so Is wages?

Mel Hope

our more each around make like Chris, Particularly, our a by this of step including the going But minimum few going next No. employees regulated hourly year. wages be by already bit. employees, do Florida, function where Colorado, hourly the than operate in good is regulatory minimum wage years, Arizona, the we up to states

that's seeing where think inflation. I most of So you're wage our

Chris O'Cull

was Okay. labor more year, fourth basis last quarter was you're clarify, first in And a you from hoping the then should I think I if quarter, trending sequential I or guess? could said on you favorably. be whether the trending that comment about thinking XQ below we

Mel Hope

it thinking more of was sequentially. I

Chris O'Cull

Okay.

Great. Thanks, Okay. guys.

Operator

from comes Charles Andrew TD question of next The go Cowen. Please ahead.

Andrew Charles

out Great. it something it's get stores hoping by could it update an Thanks. year know end planning XXXX. the about the to roll was that, that were in that you X:XX I alcohol. morning, to the but of Chris all have the to Recognize on

the to the able that, is? and can basically don't now telling been guests stores bring XXXX last XX you And were that market liquor carry awareness with years serve running Just your guys it that you've many stores achieve you the be alcohol? in what's Recognize offer do also you that, you plan that alcohol? all a this to license, in how curious, if should

Chris Tomasso

morning time of and to talk time any Yeah. best the in about day, actually alcohol. Happy for is X:XX the alcohol,

yet, the QX. and Still, team to on our of from focus So but sell it's has which X.X% in tests and our announce XX% around it's that it working of hard us. been innovation was. restaurants the is restaurants mix At end QX sitting a about the now, of some behind up where slightly for and in nothing that it that's it's

all said we'll that once start can get it rolled out the to we restaurants we As in those along that's when we to system innovate.

So the see of year. think part this to there in you'll later something start I

Andrew Charles

that could long prices And I prices place for the egg that of volatility you're But that totally in there they potentially is some period the range? you're middle normalized you then appreciate Great. what is Curious all Mel fully guess year. to I'm a the egg expectation is in fixed get on eggs. how color going where for? one contract cost normalized wondering see uncontracted pricing you, And a to before see where get in

Mel Hope

are for So our of all eggs contracted XXXX. and potatoes

and of with year this had of XX-month a that same because lot which the I don't fixed price we entered kind price expect contract volatility. was year we aspect So of the a last, fixed contract

Andrew Charles

for That’s great. Thanks the color.

Operator

go question comes next of ahead. Francfort from The Please Gregory Guggenheim.

Gregory Francfort

the first baking in My could talk as you the are guys for comparisons tougher step-up one the clarification. much question. think how get Can Thanks about comparisons? you about what March in we into just maybe a just

Mel Hope

Well, was last during with break a much? trending lot there of we spring year How -- March. think apparently

was my months I year. So break But last the what off that much, that actually too the experience break of that quarters a spring amount down but it within pretty head don't we top hefty enjoyed don't of people any is. know

Gregory Francfort

and finding for with had quickly. as at sites you're seems Got like seeing Thanks. open -- a competitors what's about talk it. of look and be than you you this a on lot year, dealing up and just tougher about different can you guys you time those And the continue have it development talk Can to industry? equipment may fronts and permitting pretty what your

Chris Tomasso

this took the the for the absolute control took control earlier, us where did with the control of facing timeline. about we're of sites and took building control talked an who why of we're Mel took year and we that it's leaning past that's it space, anybody what mean, why basically and anything Yeah. into situations I was strength we

to second and for our we why from so the backloaded schedule So our schedule development the tight even a function the though half last that's of it's though stay able in even into And feel why this too from year. confident that's COVID. development rebuilding merely year elevated pipeline were of with year it's we

able it And able that development to schedule So execute as not well. open, do talking these just we we them to as really were high only get in be about they XXXX well backloaded been. performing we're have a we'll and but get at volumes believe and them

Gregory Francfort

And Got step one there maybe then CapEx. from Just to it. a up going on on just technology last specific projects Thanks. help I any this be maybe mean, big the a pretty there Are great. side? would year.

Mel Hope

but The in next ambitions projects openings. same open growth that the lion's of meet spending projects long-term The expect year we'll already into that what share year is increased in that be set we open new will we to number has will to this XXXX. for order forth restaurant moreover be more

in pace working year returns. a accelerate, great to to a seeing of half a I our get growth lot and fast back we continue the happy order in the pleasure for of because the of of as we're dollars to brand. the We're growing mean And we're of acceleration it, part do for So it's lot of to investing investment. CapEx

Gregory Francfort

Thanks guys. Appreciate it.

Operator

go comes The ahead. James. of next Please from Raymond question Brian Vaccaro

Mel Hope

Brian. Hi

Brian Vaccaro

Omicron just year-on-year the the tease was Could maybe trends. comment or we could Thanks move Feb us on you for morning. Hey, you through back lapse underlying lot out here? view tease and the that help variability, the a that Thanks. sales or good you seeing how just I Jan as you're to my bit weekly out questions. months even caused average I hoping the a either you've three-year on and wanted of that taking given circle quarter-to-date to Hi. seen strength

Mel Hope

I casual in and three-year that, with continuing relative the don't our the of relative to full front outperformance service least on we do for that for diners the have trends are know of industry anything those the at versus categories. me. sort is What

a like lot you our guys Box use about and And think of I'm do. data do thinking Black we peers I

categories. outperformance So followed pretty with it's kind versus typical of trend much that the but, our

Brian Vaccaro

Okay.

Okay. our correct just helpful. That's sure that. pricing, wanted to on I make were notes And

X.X% you said you you think lapped as I effectively. X.X%, took the

of you'll Is you mean your no until be that does July? that sort into sort range you of get assuming, So significant additional lap? next that in take X% most

Mel Hope

about was What full we average for quarter was the X.X%. that said price

that first fifth quarter we of then in off the the So XXXX. the me full -- week first the week took year rolled this X.X% in X.X%. of took excuse And we we

So the X.X%. quarter average the is for

Brian Vaccaro

In the X.X%. Is period that quarter-to-date correct? is that

Mel Hope

For average full quarter, will the to about X.X%. it

Brian Vaccaro

Oh sorry.

Okay.

second Okay. difference circle it you the On me. relatively X% And year-on-year back for is or some last on half? versus just I'll one then, up expectation. that. Is perhaps inflation, All right, through there's talked commodity half that in think worth running terms your I year, X% to of stable inflation noting first

Mel Hope

I the the continue we seeing it's hope just It's would think than we little that mean And it to still a more at growing I I slower speculate I'm pattern. we through year. growth think a but abate as bit, the same that go for items But year pace. see to we're growing. did think slow. we're I going paying now to last

Brian Vaccaro

Okay. it I'll Thank pass you. on.

Operator

Bank The next America. Sara question ahead. of Senatore from comes Please go of

Sara Senatore

off-prem Great. love seeing you that on-prem? there The can the Are or Is Thank about. you units you some I to going daypart in I'd to give build much so some versus much. know higher. sounds of the so talked it the volumes materially you've color sort of are get on insight new that's it because on, like up? bigger part cost differences footprint's is

just you related wanted optimizing volume traffic have just the restaurant the ton footprint is a understanding it's versus much Just most And on different is don't of the on -- this to just note, higher. is understand, or was I of I not like, the what also make that something of menu a actual trying extent I but sure, ticket. know transaction difference markets sounds it price else? not to confirm, about to can versus you

Chris Tomasso

Yeah.

a restaurants new sum of the Sara, parts. On it's all

the that many footprint of of prominent into as bigger five the talked those patios the possible. implemented think more I all about initiatives it's getting kind I as new key restaurants those

These of we're portfolio restaurants are a high-profile. Again restaurants. XX-year-old

as real improvement operations in those evolved has to our process selection So site has as the the restaurants. things play estate new process all come evolved of

there. restaurants really restaurants seeing led rooms attributes; we're accommodate So to-go things the that's building the like the us other larger that. And some of dedicated demand optimized out and that pickup to we're dining areas the these to

driving bullet. volumes. It is So really all mean, all of it there's one silver no those that those it, combined are I things

Sara Senatore

just terms or of or off-prem/on-prem sorry, traffic whole? of then, the presumably in that's similar dayparts And as opposed it's different, pretty look check clarifying, Great. the mix so on to transaction its

Chris Tomasso

very similar. price do They're busier hours frankly peak has on tiers It really it's in to their with as hours. and busier restaurants Yes, similar market. other

where we've volume. that's able that been pick up to So,

Sara Senatore

I see.

on sorry more this then hand and And just one off. I'll it

of going some some a extent operational forward talked initiatives Is Some there of and of as parts more the of even you driver you those of I could are that deploying sort that the of improvements. think your through existing restaurants some the be same-store restaurants to your are think case this? to that about applicable or mature sales

Chris Tomasso

have. before some those now have deliver of approaching system that of we're our way the it independently I've we applied them independently. throughout mentioned Not the parts physical that of we all the be with of as all we a and Yes, is restaurants limitations size kit can to

continues system do process as that of why types things big it's our bussing a the are and we and can as system continue is new sales. front we even it be activities improvement to will those and of both aged of when apply; we procedures management half traffic grow around been to core actually that's and part However,

Sara Senatore

so Great. Thank much. you

Chris Tomasso

You're welcome.

Operator

go from The Jon of comes ahead. Citigroup. Please question Tower next

Jon Tower

so Great. out Thanks backing the for been taking would you've term for guidance growth the below year the longer trend question. Curious EBITDA that targeting. that's extra the suggest when the week

could that? it? than takes I getting costs on so what more maybe hoping What's potentially So, really historically? outsized just break Mel on down the was are Are preopening we on puts and weighing you seeing

Mel Hope

a considered in that bottom understandably the backdrop operating we when this a of to cautious wanted we had that bit recessionary Yes, sure we're set environment. we're and we that under range, in be

the that say the there's back been performance, has years. last some been when last I abnormality but would our pretty look for few really growth few respectable years, we But at in the

range little caution put in So, that out. in bit a frankly, that of we've we built

Jon Tower

Okay.

take words of is I'll expeditors not conservatism. of the My your dedicated with inflationary terms that just into as outlook on the and I'm that think Chris prepared So, I you much role so weighing But beverage specialization in remarks labor labor? inflation, mentioned the much How or yours. runners back the that in does how curious makers. house the

Chris Tomasso

and we for mean example. It's an out beverages way position it servers more is it's of things. and and and the time beverage out on studies the the as an server part doing handles those improvement of the not of is the tables I the the we've front that's and done. bar It's Actually community this beverage really. motion work keeping also area overall process alley I'll and type person things counter the the that for and and use --

just expense. again not really incremental an there's more specialization of roles. a It's So

Jon Tower

Got it.

So people, specializing no guess, just labor incremental be. they I should hours where

Chris Tomasso

We up to call used dedicated the restaurants we where questions us another free the example KDS, KDS expeditor. what a positions allows Yes. helm on having to that's ROI dedicated about By access system expeditor. the in I so that to about talked that get the us

improves kitchen. key in another again, KDS benefits actually for So, role our us that the one the of is opportunity to efficiency specialization

Jon Tower

I'm this been to on And the the the And hitting start speed back enhancements, When related some anything else there ovens. of cook things cook installing potentially double stuff make we perhaps smart but Chris ability a had to in of lines grills double stores? you assuming house the then of to last of kitchen; I should Awesome. mentioned just double haven't and grills it expect dishwashers, expectation I that the is to second mentioned is to able think, you'd you the piece. the past? believe service, bunch

Chris Tomasso

Yes.

as that earlier spoke those we're about as mentioned as of can. enhancements lot A of in I of as our we these being new CapEx increased are restaurants is that the earlier of enhancements. as possible some made contemplated So in we many applying those and many

all can So said. all take it's a disparate, restaurants because elements not little I like

at looking we're So those opportunities.

into and And program we doing and of that we market we elements that we're restaurants consider a where and those like market a whatever revitalization remodel time also go when things basically that at have add we can well. as

So it's going to opportunistic be rollout. a rolling

Jon Tower

Great.

Thank along. pass I’ll Okay. you.

Operator

to Tomasso remarks. any This session. for Chris the would to back closing turn concludes like I question-and-answer our over conference

Chris Tomasso

us for joining you and today questions. all your for Thank

as Before do welcome President our Marotta, joined first Investor who to formally Relations of I his first role ever I close, Steve the had today. company's team Vice and speaking want

did We're he I think to have job. Welcome a happy you. great Steve.

Steve Marotta

Thank you.

Chris Tomasso

and in work limits with the can hospitality years XX excellence. spirit to officially evenings those of innovation That's Daytime Thanks well us on and a as premise Dining spot. specializing operational continue the founded growth, were joining idea serve and moonlighting that today. on in principles different We of and pushing XX in daring and So people years were again without breakfast, We with First still this home were and afternoons brunch the founded guiding families. Watch. year us. the We be founded of to dinner of the marks for their lunch, be

Operator

The conference presentation you disconnect. concluded. has may today's now attending you and Thank now for

First Watch Restaurant (FWRG) 7 Mar 232022 Q4 Earnings call transcript