Company: FWRG
Filing Date: 2025-03-11
Form Type: 10-K
Source: 0001789940-25-000010
Chunk: 94

Company: First Watch Restaurant Group, Inc.
Filing Date: 2025-03-11
Form: 10-K
Item: Item 7
Chunk 94
---
 sales.

Income from operations decreased during 2024 as compared to 2023 primarily due to (i) higher operating costs and depreciation expense driven by our restaurant growth and acquisitions of restaurants from franchisees, as well as (ii) higher general and administrative expenses primarily attributable to additional employee headcount and performance-based compensation and (iii) the 53rd week in 2023. This decrease was partially offset by the increase in restaurant sales and franchise revenues.

Interest Expense

Interest expense primarily consists of interest and fees on our outstanding debt and the amortization expense for debt discount and deferred issuance costs. 

FISCAL YEAR(in thousands)20242023ChangeInterest expense$(12,640)$(8,063)$(4,577)56.8 %

The increase in interest expense during 2024 as compared to 2023 was primarily due (i) an increase borrowings associated with franchise acquisitions and (ii) higher interest rates.

Other Income, Net

Other income, net includes items deemed to be non-operating based on Management’s assessment of the nature of the item in relation to our core operations.

FISCAL YEAR(in thousands)20242023ChangeOther income, net$1,759 $2,871 $(1,112)(38.7)%

Other income, net decreased in 2024 primarily related to insurance recoveries received in 2023 in connection with 2022 insured losses.

47

Income Tax Expense

Income tax expense primarily consists of various federal and state taxes.

FISCAL YEAR(in thousands)20242023ChangeIncome tax expense$(9,101)$(10,690)$1,589 (14.9)%Effective income tax rate32.5 %29.6 %2.9%

The change in the effective income tax rates for 2024 as compared to 2023 was mainly due to (i) the change in the valuation allowance on deferred tax assets, (ii) the benefit of tax credits for FICA taxes on certain employees’ tips and (iii) impacts of executive stock-based compensation. 

Net Income and Net Income Margin 

FISCAL YEAR(in thousands)20242023ChangeNet income $18,925 $25,385 $(6,460)(25.4)%Net income margin1.9 %2.8 %(0.9)%

The decrease in net income and net income margin during 2024 as compared to 2023 was primarily due to (i) the decrease in income from