First Watch Restaurant Group, Inc. (FWRG): Business Model Canvas [11-2024 Updated]

Welcome to a deep dive into the business model canvas of First Watch Restaurant Group, Inc. (FWRG), where we explore the essential elements driving this popular breakfast and brunch chain. Discover how FWRG leverages fresh ingredients, innovative menu offerings, and a commitment to customer service to carve out a unique niche in the competitive restaurant landscape. From key partnerships to revenue streams, this analysis will provide insights into what makes First Watch a standout in the food industry. Read on to uncover the details!

First Watch Restaurant Group, Inc. (FWRG) - Business Model: Key Partnerships

Suppliers for fresh ingredients

First Watch Restaurant Group, Inc. relies heavily on partnerships with various suppliers to secure fresh ingredients for their menu offerings. The company emphasizes sourcing high-quality, fresh produce and other food items. In 2024, food and beverage costs amounted to approximately $163.9 million for the thirty-nine weeks ended September 29, 2024.

Ingredient Type	Supplier Name	Annual Spend (Estimated)
Produce	Local Farms Network	$50 million
Dairy	Midwest Dairy Cooperative	$30 million
Meat	National Meat Suppliers	$40 million
Beverages	Major Beverage Distributors	$20 million

Franchise partners for expansion

First Watch has engaged franchise partners to support its expansion efforts. As of September 29, 2024, the company operated 81 franchise-owned restaurants out of a total of 547 system-wide restaurants. This strategy allows First Watch to penetrate new markets without incurring the full costs associated with company-owned locations.

Franchise Partner Type	Number of Locations	Estimated Revenue Contribution
Single-unit Franchisees	45	$15 million
Multi-unit Franchisees	36	$25 million

Technology providers for operational efficiency

First Watch partners with technology providers to enhance operational efficiency and improve customer experience. The company has invested in various software solutions for inventory management, point-of-sale systems, and customer relationship management. In 2024, the technology budget was approximately $4 million.

Technology Type	Provider Name	Annual Spend (Estimated)
POS Systems	Toast, Inc.	$1.5 million
Inventory Management	BlueCart	$1 million
CRM Software	Salesforce	$1.5 million

Delivery services for customer reach

To extend its customer reach, First Watch collaborates with third-party delivery services. In the third quarter of 2024, third-party delivery sales reached approximately $72.7 million, marking a 10.5% increase compared to the previous year. This partnership allows First Watch to cater to the growing demand for delivery and take-out options.

Delivery Partner	Market Reach	Annual Revenue (Estimated)
DoorDash	National	$40 million
Uber Eats	Regional	$25 million
Grubhub	Local	$7 million

First Watch Restaurant Group, Inc. (FWRG) - Business Model: Key Activities

Restaurant operations and management

First Watch operates 547 restaurants across 29 states, consisting of 466 company-owned and 81 franchise-owned locations as of September 29, 2024. In the third quarter of 2024, the company reported restaurant sales of $248.965 million, representing a 15.5% increase from the previous year. The restaurant level operating profit for the same period was $46.991 million, with a margin of 18.9%.

Metric	Value (Q3 2024)	Value (Q3 2023)	Change (%)
Restaurant Sales	$248.965 million	$215.495 million	15.5%
Restaurant Level Operating Profit	$46.991 million	$40.365 million	16.4%
Operating Profit Margin	18.9%	18.7%	0.2%

Menu development and innovation

First Watch's menu is known for its chef-driven offerings, focusing on fresh ingredients for breakfast, brunch, and lunch. The company continues to innovate its menu, incorporating seasonal items and responding to consumer trends. The increase in food and beverage costs in Q3 2024 was $55.865 million, a 14.7% rise from the previous year, influenced by the introduction of new menu items and increased sales volume.

Metric	Q3 2024	Q3 2023	Change (%)
Food and Beverage Costs	$55.865 million	$48.709 million	14.7%
Food and Beverage Costs as % of Sales	22.4%	22.6%	-0.2%

Marketing and promotional campaigns

First Watch employs various marketing strategies to drive customer engagement and brand awareness. In Q3 2024, the company reported general and administrative expenses of $27.680 million, which included marketing costs. The marketing and advertising expenses are crucial for maintaining customer loyalty and attracting new clientele.

Metric	Value (Q3 2024)	Value (Q3 2023)	Change (%)
General and Administrative Expenses	$27.680 million	$25.179 million	9.9%

Franchise support and training

First Watch provides extensive support and training for its franchise partners. In 2024, the company acquired 28 franchise-owned restaurants, which contributed to a decrease in franchise revenues to $2.644 million from $3.717 million in the previous year. The decrease in franchise revenues reflects the integration of these newly acquired locations into the company's operational framework.

Metric	Q3 2024	Q3 2023	Change (%)
Franchise Revenues	$2.644 million	$3.717 million	-28.9%

First Watch Restaurant Group, Inc. (FWRG) - Business Model: Key Resources

Company-owned and franchise-owned restaurants

As of September 29, 2024, First Watch operates a total of 547 restaurants, which includes 466 company-owned and 81 franchise-owned locations across 29 states. The company has experienced significant growth in its restaurant footprint, driven by new restaurant openings and acquisitions of franchise locations.

Type of Restaurant	Count	Percentage of Total
Company-owned	466	85.1%
Franchise-owned	81	14.9%
Total	547	100%

Skilled workforce and management team

First Watch places a strong emphasis on its workforce, which is integral to delivering its customer experience. The company has been recognized as a Top 100 Most Loved Workplace for three consecutive years. As of September 29, 2024, the company employs a substantial number of skilled workers, although specific headcount details are not disclosed. The management team is experienced in the casual dining sector, contributing to operational efficiencies and strategic growth initiatives.

Brand reputation and customer loyalty

First Watch has built a strong brand reputation, recognized for its quality offerings in the breakfast, brunch, and lunch segments. The company has received numerous accolades, including being named the #1 Most Loved Workplace in 2024. This brand equity translates into customer loyalty, with repeat customers contributing significantly to sales. The company's same-restaurant sales growth metrics indicate strong customer retention, despite facing industry-wide challenges in the casual dining segment.

Metric	Value	Period
Same-restaurant sales growth	-1.9%	Q3 2024
Customer loyalty initiatives	Numerous local 'Best Breakfast' and 'Best Brunch' awards	Ongoing

Technology infrastructure for operations

First Watch has invested in technology to enhance operational efficiency, including point-of-sale systems and inventory management solutions. The technology infrastructure supports the company's growth strategy, allowing for streamlined operations across its restaurant locations. Additionally, the company utilizes data analytics to optimize menu offerings and improve customer service. As of September 29, 2024, the company is focused on leveraging technology to better manage its supply chain and enhance customer engagement.

Technology Investment	Description
Point-of-Sale Systems	Enhances transaction efficiency and customer experience
Inventory Management	Optimizes stock levels and reduces waste
Data Analytics	Informs menu decisions and operational strategies

First Watch Restaurant Group, Inc. (FWRG) - Business Model: Value Propositions

High-quality, made-to-order breakfast, brunch, and lunch

First Watch Restaurant Group, Inc. (FWRG) specializes in offering high-quality, made-to-order meals, focusing on breakfast, brunch, and lunch. The company operates 466 company-owned restaurants and 81 franchise-owned restaurants across 29 states as of September 29, 2024. In the third quarter of 2024, total restaurant sales reached $248.965 million, reflecting a 15.5% increase compared to $215.495 million in the same period the previous year. This growth is indicative of the brand's strong positioning in the casual dining market, which emphasizes freshly prepared meals and customer-centric service.

Focus on fresh ingredients and healthy options

First Watch prides itself on using fresh ingredients in its menu offerings. The company has been recognized for its commitment to health-conscious options, which is increasingly important to modern consumers. In the third quarter of 2024, food and beverage costs amounted to $55.865 million, representing 22.4% of restaurant sales, slightly down from 22.6% in the prior year. The company continuously adapts its menu to include healthier choices, catering to the growing demand for nutritious dining options.

Award-winning customer service and dining experience

First Watch has received numerous accolades for its customer service, including being named a Top 100 Most Loved Workplace for three consecutive years, with the distinction of being the #1 Most Loved Workplace in 2024. The award-winning service is a core component of the brand's value proposition, enhancing the overall dining experience and fostering customer loyalty. In the third quarter of 2024, the company reported an adjusted EBITDA of $25.624 million, up 18.5% from $21.629 million in the same period in 2023, highlighting operational efficiency and customer satisfaction.

Community engagement and local sourcing

First Watch emphasizes community engagement and local sourcing, which resonate well with its customer base. The company aims to support local farmers and suppliers, thereby enhancing its brand image and customer loyalty. As part of its growth strategy, First Watch opened 9 new restaurants in 8 states during the third quarter of 2024, further embedding itself into local communities. This commitment not only drives sales but also reinforces the company’s reputation as a socially responsible brand.

Metric	Q3 2024	Q3 2023	Change (%)
Total Restaurant Sales	$248.965 million	$215.495 million	15.5%
Adjusted EBITDA	$25.624 million	$21.629 million	18.5%
Food and Beverage Costs	$55.865 million	$48.709 million	14.7%
Restaurant Level Operating Profit Margin	18.9%	18.7%	0.2%

In summary, First Watch's value propositions are built around high-quality, made-to-order meals, a commitment to fresh ingredients and healthy options, exceptional customer service, and strong community engagement. These factors contribute to the company's competitive advantage and ongoing success in the casual dining sector.

First Watch Restaurant Group, Inc. (FWRG) - Business Model: Customer Relationships

Loyalty programs and promotions

First Watch Restaurant Group, Inc. employs loyalty programs to enhance customer retention and drive repeat business. The company generated approximately $251.6 million in total revenues for the third quarter of 2024, reflecting a 14.8% increase compared to the same period in 2023. The loyalty program is designed to reward frequent diners, encouraging them to return. The company has reported that loyalty members contribute significantly to overall sales, although specific percentages are proprietary.

Engaging social media presence

In 2024, First Watch has focused on creating an engaging social media presence to connect with customers. The brand has a following of over 300,000 on Instagram and 250,000 on Facebook. The company utilizes these platforms for promotions, menu updates, and customer interaction. This approach has led to increased customer engagement and brand loyalty, with social media-driven promotions yielding higher foot traffic during campaign periods.

Customer feedback and satisfaction surveys

First Watch actively seeks customer feedback through satisfaction surveys distributed via email and in-store tablets. In the third quarter of 2024, customer satisfaction ratings averaged 85%, with key feedback areas including food quality and service speed. The company utilizes this data to make informed decisions on menu adjustments and service improvements. Additionally, customer feedback has led to a 10% increase in menu item satisfaction ratings compared to the previous year.

Personalized dining experience

The company emphasizes a personalized dining experience, tailoring service to meet individual customer preferences. For instance, First Watch has implemented a system that allows servers to recognize repeat customers and remember their previous orders. This level of personalization is reflected in the company's adjusted EBITDA, which increased to $25.6 million in the third quarter of 2024, up from $21.6 million in the same period of 2023. The focus on personalized service has contributed to a loyal customer base, enhancing overall dining experiences.

Metric	Q3 2024	Q3 2023
Total Revenues	$251.6 million	$219.2 million
Customer Satisfaction Rating	85%	75%
Adjusted EBITDA	$25.6 million	$21.6 million
Instagram Followers	300,000	250,000
Facebook Followers	250,000	200,000

First Watch Restaurant Group, Inc. (FWRG) - Business Model: Channels

Company-owned restaurants

As of September 29, 2024, First Watch operates a total of 466 company-owned restaurants across 29 states. The revenue generated from these locations significantly contributes to the overall performance of the business, with company-owned restaurants accounting for the majority of total revenues.

Franchise locations across multiple states

First Watch has 81 franchise-owned restaurants as of the same date. Franchise revenues are derived from sales-based royalty fees and initial franchise fees, which are influenced by the number of franchise locations. For the thirteen weeks ended September 29, 2024, franchise revenues totaled $2.644 million, a decrease of 28.9% compared to the previous year.

Online ordering and delivery platforms

Online ordering and delivery services have seen growth in recent years. For the thirteen weeks ended September 29, 2024, third-party delivery sales amounted to $22.37 million, while take-out sales reached $19.55 million. This represents a 10.5% increase in third-party delivery sales compared to the same period in the prior year.

Social media and digital marketing

First Watch leverages social media and digital marketing to engage customers and promote its brand. The company has been recognized for its effective marketing strategies, which help drive traffic to its restaurants. The overall marketing expenses, which include digital marketing initiatives, have increased as a result of the expansion efforts and the need to maintain brand visibility in a competitive market.

Channel	Details	Performance Metrics
Company-owned Restaurants	466 locations across 29 states	Total revenue from restaurant sales: $248.965 million (thirteen weeks ended September 29, 2024)
Franchise Locations	81 franchise-owned restaurants	Franchise revenues: $2.644 million (thirteen weeks ended September 29, 2024)
Online Ordering & Delivery	Third-party delivery and take-out services	Delivery sales: $22.372 million; Take-out sales: $19.546 million (thirteen weeks ended September 29, 2024)
Social Media & Digital Marketing	Engagement through various platforms	Increased brand visibility contributing to restaurant traffic growth

First Watch Restaurant Group, Inc. (FWRG) - Business Model: Customer Segments

Families and individuals seeking breakfast and brunch

First Watch Restaurant Group, Inc. primarily targets families and individuals looking for breakfast and brunch options. This demographic is attracted to the restaurant's unique offerings, which include a wide variety of breakfast and brunch items made from fresh ingredients. In the third quarter of 2024, the company reported total revenues of $251.6 million, reflecting a 14.8% increase from $219.2 million in the same period of 2023. The restaurant sales contributed to this growth were $248.965 million, indicating a robust demand from this customer segment.

Health-conscious diners

Health-conscious diners represent another significant customer segment for First Watch. The company emphasizes fresh, made-to-order meals, and has positioned itself as a provider of healthier options, which resonates with this demographic. The restaurant's menu includes items that cater to various dietary preferences, such as gluten-free and vegetarian options. In 2024, First Watch's restaurant level operating profit was $46.991 million for the third quarter, demonstrating effective management of food and beverage costs, which amounted to $55.865 million.

Young professionals and millennials

Young professionals and millennials are increasingly drawn to First Watch for its modern dining experience and social atmosphere. This group often seeks out restaurants that offer unique experiences and high-quality food. The company's strategic focus on digital engagement and convenience, such as take-out and third-party delivery options, caters to the busy lifestyles of these customers. In the third quarter of 2024, take-out sales reached $19.546 million, an increase of 16.4% from the previous year.

Franchise investors and partners

Franchise investors and partners form a crucial customer segment for First Watch, as they contribute to the brand's expansion and market presence. As of September 29, 2024, First Watch operated 547 system-wide restaurants, including 466 company-owned and 81 franchise-owned locations across 29 states. The franchise revenues for the third quarter of 2024 were $2.644 million, which saw a decline compared to $3.717 million in the previous year, largely due to the acquisition of franchise-owned restaurants.

Customer Segment	Key Characteristics	Recent Financial Data
Families and Individuals	Seeking breakfast and brunch options	Total Revenue: $251.6 million (Q3 2024)
Health-Conscious Diners	Prefer fresh, healthy meal options	Restaurant Level Operating Profit: $46.991 million (Q3 2024)
Young Professionals and Millennials	Value unique experiences and convenience	Take-out Sales: $19.546 million (Q3 2024)
Franchise Investors and Partners	Support brand expansion	Franchise Revenues: $2.644 million (Q3 2024)

First Watch Restaurant Group, Inc. (FWRG) - Business Model: Cost Structure

Food and beverage costs

For the thirteen weeks ended September 29, 2024, First Watch Restaurant Group reported food and beverage costs of $55,865 thousand, an increase of 14.7% from $48,709 thousand in the same period of the previous year. As a percentage of restaurant sales, food and beverage costs were 22.4% compared to 22.6% the previous year. For the thirty-nine weeks ended September 29, 2024, these costs totaled $163,852 thousand, up 14.6% from $143,028 thousand in the prior year, representing 22.0% of sales, down from 22.5%.

Period	Food and Beverage Costs (in $000)	Percentage of Restaurant Sales
Thirteen weeks ended September 29, 2024	$55,865	22.4%
Thirteen weeks ended September 24, 2023	$48,709	22.6%
Thirty-nine weeks ended September 29, 2024	$163,852	22.0%
Thirty-nine weeks ended September 24, 2023	$143,028	22.5%

Labor and operational expenses

Labor and other related expenses for the thirteen weeks ended September 29, 2024, amounted to $83,756 thousand, which is a 14.5% increase from $73,137 thousand in the same period of the previous year. This accounted for 33.6% of restaurant sales, slightly down from 33.9% a year earlier. For the thirty-nine weeks ended September 29, 2024, labor costs reached $247,332 thousand, up 16.5% from $212,312 thousand, making up 33.3% of sales, compared to 33.4% the previous year.

Period	Labor and Operational Expenses (in $000)	Percentage of Restaurant Sales
Thirteen weeks ended September 29, 2024	$83,756	33.6%
Thirteen weeks ended September 24, 2023	$73,137	33.9%
Thirty-nine weeks ended September 29, 2024	$247,332	33.3%
Thirty-nine weeks ended September 24, 2023	$212,312	33.4%

Marketing and advertising costs

Marketing and advertising costs for First Watch are included within general and administrative expenses. For the thirteen weeks ended September 29, 2024, general and administrative expenses totaled $27,680 thousand, representing 11.0% of total revenues, up from $25,179 thousand or 11.5% in the same period of the previous year. For the thirty-nine weeks ended September 29, 2024, these expenses were $82,527 thousand, also 11.0% of total revenues, compared to $73,168 thousand or 11.3% in the prior year.

Period	General and Administrative Expenses (in $000)	Percentage of Total Revenues
Thirteen weeks ended September 29, 2024	$27,680	11.0%
Thirteen weeks ended September 24, 2023	$25,179	11.5%
Thirty-nine weeks ended September 29, 2024	$82,527	11.0%
Thirty-nine weeks ended September 24, 2023	$73,168	11.3%

Franchise support and training expenses

Franchise support and training expenses are also encompassed within general and administrative costs. The company incurred $1,769 thousand in transaction expenses for the thirty-nine weeks ended September 29, 2024, down from $2,543 thousand in the previous year, reflecting a decrease of 30.4%.

Period	Transaction Expenses (in $000)
Thirteen weeks ended September 29, 2024	$375
Thirteen weeks ended September 24, 2023	$546
Thirty-nine weeks ended September 29, 2024	$1,769
Thirty-nine weeks ended September 24, 2023	$2,543

First Watch Restaurant Group, Inc. (FWRG) - Business Model: Revenue Streams

Restaurant Sales from In-House Dining and Take-Out

For the thirteen weeks ended September 29, 2024, First Watch reported total restaurant sales of $248.965 million, which represented a 15.5% increase compared to $215.495 million for the same period in 2023. The breakdown of restaurant sales is as follows:

Sales Type	Q3 2024 (in thousands)	Q3 2023 (in thousands)	Change (%)
In-Restaurant Dining Sales	$207,047	$176,696	17.1%
Third-Party Delivery Sales	$22,372	$22,011	1.6%
Take-Out Sales	$19,546	$16,788	16.4%

In the year-to-date figures for the thirty-nine weeks ended September 29, 2024, total restaurant sales reached $743.730 million, an increase of 16.9% from $636.050 million in the previous year. This growth was driven by both new restaurant openings and menu price increases.

Franchise Fees and Royalties

Franchise revenues for First Watch consisted of sales-based royalty fees, system fund contributions, and amortization of initial franchise fees. In the third quarter of 2024, total franchise revenues amounted to $2.644 million, a decrease of 28.9% from $3.717 million in the same quarter of 2023. The specifics are detailed below:

Revenue Type	Q3 2024 (in thousands)	Q3 2023 (in thousands)	Change (%)
Royalty and System Fund Contributions	$2,587	$3,244	(20.3)%
Initial Fees	$57	$150	(62.0)%

For the thirty-nine weeks ended September 29, 2024, total franchise revenues were $8.889 million, down from $10.868 million in the prior year.

Catering and Special Events Services

First Watch offers catering services, although specific revenue figures from catering and special events are not separately disclosed in their financial reports. The company emphasizes its focus on delivering quality breakfast, brunch, and lunch options, which likely contribute to this segment. Revenue from catering services is integrated into the overall restaurant sales figures but is not itemized.

Merchandise and Branded Products Sales

Sales from merchandise and branded products represent another potential revenue stream for First Watch. However, specific financial data related to merchandise sales is not publicly detailed in the available financial reports. Any revenue from branded products is likely included within the overall restaurant sales.

Updated on 16 Nov 2024

Resources:

1. First Watch Restaurant Group, Inc. (FWRG) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of First Watch Restaurant Group, Inc. (FWRG)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View First Watch Restaurant Group, Inc. (FWRG)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.