First Watch 2025 Q2 Earnings Earnings Plunge 80% Despite Strong Revenue Growth

First Watch (FWRG) reported its fiscal 2025 Q2 earnings on August 5, 2025, delivering a revenue beat but falling short on earnings. The company exceeded expectations with 19.1% year-over-year revenue growth, yet net income and EPS declined sharply. It maintained its full-year guidance, signaling continued investment in growth and digital innovation.

Revenue
First Watch's total revenue surged 19.1% to $307.89 million in the second quarter of fiscal 2025, compared to $258.56 million in the same period of the prior year. This strong performance reflects the impact of new restaurant openings, successful acquisitions, and sustained traffic growth, especially at its same-restaurant locations. The company’s ability to drive revenue growth highlights its expanding footprint and brand appeal.

Earnings/Net Income
Despite the impressive top-line growth, First Watch reported a significant decline in profitability. Earnings per share (EPS) fell 80.0% to $0.03 in Q2 2025, down from $0.15 in the prior-year period. Net income also dropped 76.3% to $2.11 million, compared to $8.90 million in 2024 Q2. The sharp drop in earnings signals growing pressure from rising costs or operational challenges.

Price Action
First Watch’s stock price dipped 8.30% during the latest trading day but showed resilience with a 5.75% gain over the most recent full trading week and a 1.08% rise month-to-date.

Post-Earnings Price Action Review
A strategy of buying First Watch shares after the revenue-positive earnings report and holding for 30 days yielded a -7.82% return, underperforming the benchmark by the same margin. The negative Sharpe ratio of -0.06 indicates a poor risk-return trade-off, while the maximum drawdown of 0.00% suggests limited volatility but significant downside.

CEO Commentary
Christopher A. Tomasso, CEO, highlighted First Watch’s strong Q2 performance, driven by new restaurant openings and successful acquisitions. The company experienced its best monthly same-restaurant traffic in over two years and record sales on Mother’s Day. Tomasso emphasized the success of pricing strategies and brand-driven marketing in attracting younger demographics. He praised the team for high execution standards and reiterated confidence in unit growth, with 130+ new sites in the pipeline. Strategic priorities include enhancing the customer experience via digital innovations and expanding into second-generation locations. Tomasso’s tone was optimistic, citing robust AUV growth, strong employee retention, and a culture of innovation as foundational to long-term success.

Guidance
First Watch maintained its full-year 2025 guidance, projecting low single-digit same-restaurant sales growth and flat-to-slightly-positive traffic, with 3% full-year pricing. The company expects to open 62–67 new system-wide restaurants, driving ~20% revenue growth and adjusted EBITDA of $119–$123 million. Commodity cost inflation is expected to remain moderate at 5–7%, with improved egg costs. Capital expenditures are forecasted at $148–$152 million, and the blended tax rate is expected to range between 35–40%.

Additional News
On August 4, 2025, ahead of the earnings report, a preview article titled *“What To Expect From First Watch’s (FWRG) Q2 Earnings”* noted that the company met revenue expectations in the previous quarter, with revenues reaching $282.2 million—up 16.4% year on year. The piece described it as a “softer quarter” in terms of overall performance, hinting at potential challenges ahead despite the revenue beat. The article suggested investors should focus on how the company navigates these pressures while scaling its operations. No details were provided on M&A activity, executive changes, or capital return plans within the preview.