First Watch Restaurant Group (FWRG) investor relations material

Pricing and value strategy

• Maintains a conservative pricing approach, with average check below $18, focusing on long-term inflation rather than short-term pressures.

• 2025 pricing increase is about 3.5%, below the 6% expected inflation, prioritizing traffic over full inflation coverage.

• Relative value has improved as franchised competitors raised prices more aggressively.

• Pricing decisions are based on internal cost structure, not peer actions, with a focus on quality and guest experience.

• Value strategy is well received by consumers, supporting traffic growth.

Margin management and inflation

• Targets 18%-20% restaurant-level margins, confident in maintaining this range despite inflationary pressures.

• Labor inflation expected to stabilize, especially as statutory minimum wage increases phase out in key states.

• Commodity inflation in 2025 was driven by eggs, bacon, coffee, and avocados, with some relief expected in 2026.

• Margin impact from off-premise business is managed through small markups and reduced surcharges, balancing volume and profitability.

Off-premise and traffic trends

• Off-premise sales represent about 20% of total business, with more than half from third-party channels.

• Off-premise occasions are considered incremental, as dine-in traffic has also improved.

• Adjustments to third-party surcharges reversed negative traffic trends in that channel.

• Same-store sales growth for 2025 is projected at 4%, with 1% traffic growth, supported by hospitality and marketing initiatives.