Company: FWRG
Filing Date: 2025-04-08
Form Type: ARS
Source: 0001789940-25-000033
Chunk: 73

Company: First Watch Restaurant Group, Inc.
Filing Date: 2025-04-08
Form: ARS
Chunk 73
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3 and (iv) commodity inflation. The increase was partially affected by the additional 53rd week in 2023. Labor and Other Related Expenses Labor and other related expenses are variable by nature and include hourly and management wages, bonuses, payroll taxes, workers’ compensation expense and employee benefits. Factors that influence labor costs include minimum wage and payroll tax legislation, health care costs, the number and performance of our company-owned restaurants and increased competition for qualified staff. FISCAL YEAR (in thousands) 2024 2023 Change Labor and other related expenses $ 335,038 $ 294,010 $ 41,028 14.0 % As a percentage of restaurant sales 33.4 % 33.5 % (0.1)% Labor and other related expenses as a percentage of restaurant sales decreased during 2024 as compared to 2023 primarily as a result of (i) menu price increases and (ii) improved hourly labor efficiency. This decrease was partially offset by (i) wage increases and (ii) higher health insurance costs. The increase in labor and other related expenses during 2024 as compared to 2023 was primarily due to (i) the increase in staffing levels to support the increase in corporate-owned restaurants (ii) wage increases and (iii) higher health insurance costs. The increase was partially offset by (i) hourly labor efficiency and (ii) the additional 53rd week in 2023. Franchise Revenues Franchise revenues are comprised of sales-based royalty fees, system fund contributions and the amortization of upfront initial franchise fees, which are recognized as revenue on a straight-line basis over the term of the franchise agreement. Franchise revenues in any period are directly influenced by the number of open franchise-owned restaurants. 45

FISCAL YEAR (in thousands) 2024 2023 Change Other restaurant operating expenses $ 151,968 $ 134,477 $ 17,491 13.0 % As a percentage of restaurant sales 15.1 % 15.3 % (0.2)% Other restaurant operating expenses as a percentage of restaurant sales during 2024 decreased as compared to 2023 primarily due to (i) leveraging menu price increases, (ii) third-party delivery related revenue and expenses, including to-go supplies and third-party delivery fees, increasing at a lower rate than total restaurant sales. This decrease was partially offset by (i) utilities expenses, (ii) restaurant advertising costs and (iii) credit card fees which increased as