Chris Tomasso knew he’d take some lumps earlier in the year. First Watch increased portion sizes, even doing so with bacon despite soaring commodity costs. But if there’s one framework to describe how the brand navigated the past couple of years, from persistent inflation to a weary consumer to a flurry of promotions, it’s “making bold decisions and zigging when others are zagging,” Tomasso says.
“The consumer catches on to tricks and discount offers and things like that,” the CEO adds. “But when you’re really focused on hospitality and taking care of the consumer, they notice that even more.”
First Watch did, in fact, slog through as same-store sales inched 0.7 percent in Q1 and traffic fell the same. Yet the brand held a long-term, consumer-focused view and avoided being reactionary. And now, it’s being rewarded, Tomasso says, not for “difficult decisions,” per se, but calls that were counter intuitive to what was going on around it.
The brand in Q3 posted same-store sales of 7.1 percent and traffic of 2.6 percent (the numbers were 3.5 and 2 percent in Q2, respectively). It marked the fourth consecutive quarter of sequential improvement on both fronts and the best quarterly result for each in more than two years. The traffic performance was First Watch’s loftiest in seven quarters. And the month of September represented the company’s highest rate of same-store sales growth for the entire year so far. Third-party delivery traffic also hiked “substantially.”
There are a host of drivers at work, Tomasso says, but the hospitality point is one he believes can’t be overstated. Making decisions such as bringing back coffee to waiting customers or empowering managers to deliver acts of kindness (more on that here), sent a message to guests and employees alike. “Look, if you start cutting portions and other things [First Watch doubled the portion of meat in one of its top-selling items, the Tri-Fecta], employees see it, they feel it, they become less proud to work there, to serve food, and we’re trying to do the opposite with our seasonal menu,” Tomasso says. “Our servers are so excited and happy to tell the customer about the new items we have and all the things we’ve done. They kind of get to be Santa Claus and now deliver Tri-Fectas with twice the amount of meat on them for the same price that we were charging before.”
“We’re trying to set up an ecosystem that caters to the consumers but also creates an environment for our employees to prosper,” he continues.
More “surprise-and-delight” could be in store as well given First Watch’s ongoing core menu test. The pilot, in action “for some time,” redesigns and reengineers offerings to improve readability, broaden appeal, optimize mix, and streamline operations. It features high-performing, previous seasonal menu choices instead of some lower mix items.
Tomasso says qualitative and quantitative metrics to date have been “encouraging.” First Watch expects to roll it out systemwide early next year.
Holding fort and marketing moves
Another place First Watch “zigged,” though, was on price. It chose not to implement actions that would have offset what it considers transitory increases in commodity costs. “There aren’t many metrics where we lag,” Tomasso says, “but we’re pleased to be [a] laggard when it comes to pricing. The result of a steadfast pricing strategy is that our long-term margin profile is, and has always been, secure.” Concurrent with its fall seasonal launch in August, First Watch instituted a price increase of 1.1 percent to bring the chain’s full-year carry to about 3.5 percent.
First Watch’s total revenue in Q3 increased 25.6 percent, year-over-year, to $316 million. Restaurant-level operating profit margin rose to 19.7 percent compared to 18.9 percent in the comparable quarter and adjusted EBITDA upped to $34.1 million versus $25.6 million. The company’s annual restaurant-level margin target, long term, remains 18–20 percent and cash-on-cash returns of about 35 percent.
Tomasso credited three growth culprits for the revenue jump: strong new restaurant opening performance, same-store sales gains, and accretive strategic franchise acquisitions (First Watch has bought 19 stores since Q2 2024).
Speaking to the first one, First Watch has reported nearly five years of double-digit percentage quarterly growth. And that’s a reality tied to the chain opening what’s essentially a regional brand, size wise, every calendar. It brought 21 systemwide stores to market in Q3 across 14 states and is on pace to satisfy its target of 63–64 openings for the year, which would represent roughly 11 percent growth. First Watch has opened 51 locations in 30 markets across 21 states so far in 2025.
But as Tomasso highlighted, it’s been the outperformance of new stores that has First Watch eyeing 2,200 U.S. units with optimism.
Nine of its 10 highest-opening week sales in company history, he shared, were achieved in restaurants debuted within the last 12 months. First Watch restaurants in fresh markets like Boston, Las Vegas, and Memphis opened stronger than anticipated.
Tomasso says one of the strengths of First Watch’s business model is that, unlike some other concepts, its openings in both new and emerging markets perform.
The brand last quarter spoke about how it’s begun to lean into a real estate strategy of converting second-generation sites. Of the 21 stores opened in Q3, 13 fell into that distinction (the company expects the same mix in 2026).
And of the 10 highest opening week sales noted, nine were second-gen boxes. Moreover, some have opened at volumes more than 190 percent of First Watch’s larger average-unit volume.
“The customer that comes to us does so because they care about quality ingredients, they want to eat healthy, they want value and consistency, and we’ve been delivering that for a long time,” Tomasso says.
A location in Dover, Delaware, cut the ribbon during the final week of Q3. It posted opening week sales that exceeded 185 percent of First Watch’s comp base average, “underscoring the strong demand for our concept and the strategic value of the site,” Tomasso says
First Watch signed the lease in January and advanced through construction to open in eight months. “No full-service restaurant company is opening at anything close to our pace, making it daunting for segment competitors to enter markets where we have an established presence,” he says.
A key point in the second-gen roadmap is that stores are upfront, visible locations, not throwaways. The sites themselves, Tomasso says, act as billboards. And First Watch is getting better at fitting locations and creating buzz. Or, as Tomasso refers to it, honing a “go for launch” mantra.
It’s a combination of building preopening demand and then delivering when people show up. “It’s really important when you’re doing these kinds of outsized volumes to wow people,” he says. “Those first reviews are really, really important.”
The company talks about its ability to open restaurants as “one of our strongest muscles.”
“And we just continue to flex it, and it continues to drive value for us,” Tomasso says.
First Watch’s top decile restaurants span 14 states and 22 DMAs with consistent AUVs across the 32-state map. It’s a reason why the company sees 2,200 units as a tangible target—a figure that would, if it happened today, make First Watch the largest full-service restaurant in America (ahead of Waffle House’s roughly 2,000 stores).
Tomasso says a positive sign, for any restaurant company, is when you can open new units across geographies and not have to lean into any specific area to cover up for others.
In the past five years, First Watch has debuted more than 230 restaurants. Its three-year new restaurant opening AUV targets have climbed from $1.6 million to $2.7 million. First Watch expanded its systemwide count from 428 to 620 since going public and EBITDA has more than doubled.
And it’s been an interesting and ever-evolving landscape, Tomasso says, when you consider First Watch’s balance of feeling local, being an aggressively scaling chain, and yet, as it said when it went public four years ago, not having a ton of unaided brand awareness compared to like-sized peers. Back when it filed, just 11 percent of respondents were aware of First Watch, per a national survey.
Tomasso says many customers today still have no idea First Watch is a chain. It wins “best local breakfast” in markets and opens locations that, while the design has a threading theme company-wide, no two stores look the same. “And so, I think there’s still very much a discovery phase with the consumer and First Watch,” he says. “We talked about that pre-IPO—that we were kind of a word-of-mouth concept. Our consumers want to be the ones who tell their friends about us and are in the know. But now, you couple that we these high-profile locations that we’re building.”
Naturally, the awareness number is coming up as First Watch’s unit count does. But still, Tomasso says, it’s relatively low, perhaps half what you might see for other chains of this breadth (620 units end of Q3).
He adds First Watch is leveraging this potential more than ever. Internally, the company talks about the goal of “amplifying the word of mouth.” It didn’t have the digital and social tools a few years ago it does today. So, the company can tap local influencers and not resort to national or mainstream approaches, with the hope of guarding First Watch’s “aura of a network of neighborhood restaurants versus a chain” while also amplifying the brand.
“I think that’s important to us as we go forward and then, I don’t care what you do from a marketing side, you have to deliver on the ops, the execution, the experience, and make sure when the consumer leaves, they feel like they got a tremendous value,” Tomasso says. “And we’ve worked really hard on that part as well.”
Q3 was First Watch’s third consecutive quarter of increased marketing spend over last year. It has three full periods of “compelling evidence” now, Tomasso says, of why it’s going to keep pushing integrated campaigns across visual, paid search, social media, and other channels.
The markets First Watch targeted in 2025 represent less than a third of its overall restaurant portfolio, giving it space to expand reach in the future. The company is also preparing to relaunch its digital platform—consumer facing and back-of-house. An example being First Watch’s new app, introduced in Q2, that has garnered “thousands” of positive ratings and reviews, Tomasso says, and currently maintains a five-star ranking.
First Watch, though, remains in the early stages of capitalizing on its digital capabilities overall. Tomasso says the brand continues to collect data on a granular level and upgrade its customer data platform, geolocation capabilities, order experience, and CRM systems.
First Watch’s database of identified customers presently sits at about 7 million, the majority of which, Tomasso says, are connected to social media and online presence platforms, enabling the chain to better execute targeted micro-marketing campaigns. First Watch’s larger aim has been to increase occasions regardless of whether or not these are new visits or recurring ones.
Tech advancements across First Watch’s marketing function contributed to the performance of a digital effort that landed in September. Despite hitting fewer than half of last year’s recipients, the brand appreciated more than 2X the response rate and engagement, Tomasso says.
Category insulation and employee appreciation
The breakfast and brunch segments, as Tomasso explained at times last year, have been volatile. It’s a daypart that tends to get swapped at home when wallets tighten. Yet First Watch hasn’t felt the guest count sting to the same extent as others, he says, because it caters to an affluent base that’s not pulling back as dramatically. The brand remains underexposed to current demographic pressures. A case in action—weekday breakfast posted the best traffic of its dayparts in Q3, despite larger trends.
“The customer that comes to us does so because they care about quality ingredients, they want to eat healthy, they want value and consistency, and we’ve been delivering that for a long time,” Tomasso says. “And they get to go on a culinary adventure with us and some of the items that we put out there. All of those things have insulated us, at least in this environment, from what others are seeing.”
And then there’s the point of living up to its experience. Sometimes it’s as simple as opening the door and greeting a guest as they walk in during a time when some are cutting staff. But there have been a few operational upgrades in recent years as well to further reinforce First Wach’s value promise by stripping friction.
For instance, rolling KDS and becoming more efficient. Yet also, app changes and waitlist management, and enabling customers to pay checks without walking to the register. “We’re really trying to just make it so that everywhere the consumer, and specifically our customer, looks, our value gets better and better, whether it’s the time it takes for their food to get to the table, the visibility they have into the wait process, opening the front door, just efficiency, and execution, and consistency,” Tomasso says.
“And we think in turbulent times like this, those are the things that the consumers really value and then turn to, specifically the consistency part,” he adds. “They just don’t want to put their dollars at risk.”
First Watch recently completed its annual WHY Tour and Tomasso says feedback proved employee satisfaction tied to culture. The brand’s restaurant-level turnover has improved for 10 consecutive quarters.
First Watch’s one-shift scheduling model and benefits are helping it separate, he says. First Watch offers perks like backup childcare and elder care, complementary personal and professional coaching, and free telemedicine service. Its growth, Tomasso adds, also clarifies career ladders “simply unmatched anywhere else in the industry.”
The company recently topped Best Practice Institute’s Most Loved Workplace list for the second straight year.
“When you’re able to do things like that,” Tomasso says, referencing the full picture, “you can really stand out in a time like this.”
