Company: FWRG
Filing Date: 2025-11-04
Form Type: 10-Q
Source: 0001789940-25-000086
Chunk: 21

Company: First Watch Restaurant Group, Inc.
Filing Date: 2025-11-04
Form: 10-Q
Item: Part I, Item 1
Chunk 21
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 accounting for internal-use software by replacing stage-based rules with a principles-based framework, clarifying the criteria for capitalization and merging website development cost guidance. The amendments in this update are effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. The update may be applied prospectively, retrospectively, or on a modified transition basis based on the status of the project and whether software costs were capitalized before the date of adoption. Management is currently evaluating the impact of this new standard.Recent accounting guidance not discussed herein is not applicable, did not have, or is not expected to have a material impact to the Company.

3.    Business Acquisitions

During the second quarter of 2025, the Company acquired, in two separate transactions, substantially all the assets associated with 19 franchise-operated First Watch restaurants. For both transactions, the purchase price was allocated to the fair value of the assets acquired and the liabilities assumed. The allocations were based on preliminary valuations and are subject to adjustment as additional information is available. The Company expects to finalize the valuations of these assets no later than one year from the respective acquisition dates. DATE OF ACQUISITION(in thousands, except number of acquired restaurants)APRIL 14, 2025APRIL 28, 2025Number of acquired restaurants316Purchase price (cash)$6,985 $49,247 Transaction costs incurred$416 $1,005 Deferred franchise fees recognized as a result of termination of pre-existing franchise agreement$— $398 Recognized amounts of identifiable assets acquired and liabilities assumed:Cash$5 $24 Inventory$31 $159 Other assets$9 $124 Property, fixtures and equipment$2,998 $19,800 Reacquired rights$1,920 $13,060 Goodwill$2,876 $18,767 Operating right-of-use assets, net of lease positions and prepaid rent$2,922 $17,305 Operating lease liabilities$(3,735)$(19,896)Accounts payable$(2)$— Deferred revenues - gift card liabilities assumed$(39)$(96)Goodwill reflects the value of expected synergies and assembled workforce, and was assigned to the Company’s single reporting unit. The Company will treat the transactions as asset acquisitions for income tax purposes, which allows for any goodwill recognized to be tax deductible and amortized over a 15-year statutory life. The weighted