Company: FWRG
Filing Date: 2025-08-05
Form Type: 10-Q
Source: 0001789940-25-000072
Chunk: 29

Company: First Watch Restaurant Group, Inc.
Filing Date: 2025-08-05
Form: 10-Q
Item: Part I, Item 1
Chunk 29
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Income before income taxes$3,576 $13,779 $2,039 $23,792 Income tax expense$(1,470)$(4,879)$(762)$(7,678)Effective income tax rate41.1 %35.4 %37.4 %32.3 %The effective income tax rate was 41.1% and 35.4% for the thirteen weeks ended June 29, 2025 and June 30, 2024, respectively, and 37.4% and 32.3% for the twenty-six weeks ended June 29, 2025 and June 30, 2024, respectively. In the United States, a restaurant company employer may claim a credit against its federal income taxes for FICA taxes paid on certain tipped wages (the “FICA tax credit”). The level of FICA tax credits is primarily driven by restaurant sales. Income tax expense during the thirteen and twenty-six weeks ended June 29, 2025 decreased as compared to the same periods in the prior year primarily due to the decrease in income before taxes, the benefit of FICA tax credits and the change in the valuation allowance. The effective income tax rates during the thirteen and twenty-six weeks ended June 29, 2025 increased as compared to the same periods in the prior year primarily due to the benefit of FICA tax credits and the change in valuation allowance.The effective income tax rates for the thirteen and twenty-six weeks ended June 29, 2025 and June 30, 2024 were different than the blended federal and state statutory rate primarily due to the change in the valuation allowance, the benefit of FICA tax credits and the impacts of executive stock-based compensation. On July 4, 2025, H.R. 1 – One Big Beautiful Bill (“the Bill”) was enacted into law. The Bill provides for significant U.S. tax law changes and modifications, including making permanent 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. Since the legislation was not signed into law until after the end of our second quarter, the impacts are not included in our operating results for the twenty-six weeks ended June 29, 2025. We are currently assessing its impact on our consolidated financial statements.  Valuation allowanceManagement evaluates quarterly whether the resulting deferred