Company: FWRG
Filing Date: 2025-03-11
Form Type: 10-K
Source: 0001789940-25-000010
Chunk: 93

Company: First Watch Restaurant Group, Inc.
Filing Date: 2025-03-11
Form: 10-K
Item: Item 7
Chunk 93
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 book value of assets that have been retired or replaced in the normal course of business and (iii) the write-off of the net book value of assets in connection with restaurant closures and natural disasters.

FISCAL YEAR(in thousands)20242023ChangeImpairments and loss on disposal of assets$525 $1,359 $(834)(61.4)%

In 2024, the amounts represented write-off of assets retired as a result of restaurant closures or replacements of assets. There were no impairment losses recognized. In 2023, we recorded total impairment charges of $0.5 million, which primarily related to the long-lived assets of two company-owned restaurants for which Management agreed to accelerate the expected closure dates.

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Transaction Expenses, Net

Transaction expenses, net include (i) costs incurred in connection with the acquisition of franchise-owned restaurants, (ii) costs related to certain equity offerings, (iii) costs related to restaurant closures, (iv) gains or losses associated with lease or contract terminations and (v) revaluations of contingent consideration payable to previous stockholders for tax savings generated through the use of federal and state loss carryforwards and general business credits that had been accumulated from operations prior to August 2017.

FISCAL YEAR(in thousands)20242023ChangeTransaction expenses, net$2,587 $3,147 $(560)(17.8)%

Transaction expenses, net decreased during 2024 as compared to 2023 primarily due to (i) lower costs incurred in connection with the acquisitions of restaurants from our franchisees and (ii) contingent consideration liability reduction. This decrease was partially offset by an increase in costs incurred by us in connection with the sale of the Company’s common stock by funds managed by Advent through secondary public offerings.

Income from Operations and Income from Operations Margin

FISCAL YEAR(in thousands)20242023ChangeIncome from operations$38,907 $41,267 $(2,360)(5.7)%Income from operations margin3.9 %4.7 %(0.8)%

Income from operations margin decreased during 2024 as compared to 2023 primarily due to (i) deleveraging of certain expenses, including occupancy expenses, as a result of a decline in same-restaurant sales and (ii) higher depreciation and amortization expense driven by our restaurant growth and acquisition of certain franchise-owned restaurants partially offset by (i) labor efficiency and (ii) food and beverage costs improving as a percent of