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First-Watch-Q1-Kitchen-Display-System.jpg First Watch Restaurant Group Inc.
First Watch Restaurant Group Inc. began rolling out a new kitchen display system in 2021.

First Watch pleased with kitchen display system rollout

Faster through-put is one benefit as breakfast-lunch brand expands new KDS to 65 units

First Watch Restaurant Group Inc. continue to expand the rollout of its new kitchen display system in the first quarter, and executives said they are pleased with the impact so far.

The Bradenton,, Fla.-based breakfast-lunch concept updated analysts on the new system Tuesday after releasing earnings for the first quarter ended March 27.

“We're conducting an efficient rollout with plans to have KDS in more than half of our company-owned restaurants by the end of this year,” said Chris Tomasso, First Watch’s CEO and president, on an earnings call.

The new system is in all new company-owned restaurants, and it has been installed in more than 65 First Watch units, up from 20 at the end of 2021, he said.

“I'm so encouraged by the overwhelming support for this project by our teams and the positive energy that exists throughout the organization around this rollout,” Tomasso said.

Two restaurants with the new KDS on Mother’s Day were in the Top Two for sales during the holiday, the biggest sales day of the year, he said, “We’ve been able to deliver some higher peak sales hours in those restaurants as well,” Tomasso said.

He said the display system reduces friction in the restaurants and increases through-put in high-demand periods.

“Our goal is to get it rolled out as soon as we can, and as soon as we can train it and get it operational in restaurants,” he said.

Mel Hope, First Watch’s chief financial officer, said sales picked up in late March after suffering COVID-19 impact in January and early February.

“Furthermore, the increased sales and traffic we experienced in March have continued into our second quarter,” Hope said.

“Our same-restaurant sales growth was 27.2%, driven by our same restaurant traffic growth of 21.9%, which we achieved despite the negative impacts in January from the Omicron variant and from winter storms,” Hope said.

“After we chose not to increase our prices in 2021, we did take a 3.9% menu price increase in early January of 2022,” he said. “As we've shared before, we believe we have additional pricing power should we determine to revisit our menu prices later this year due to continued inflation in our variable costs.”

Inflation led to a 15% increase in the brand’s market basked in the first quarter, he said.

“Despite that, our food and beverage costs as a percentage of restaurant sales came in at 23.1%, which is actually down 50 basis points from Q4 of 2021,” Hope said. “Labor and other related expenses as a percentage of restaurant sales for the quarter landed at 32.3%, which is also 50 basis points lower than the fourth quarter of last year.”

He said the downward trend in labor percentage was primarily due to the surge in March sales,

For the first quarter ended March 27, First Watch reported net income of $4.6 million, or eight cents a share, a swing from a loss of $2 million, or five cents a share, in the same period last year. Revenues increase to $173.1 million from $127.2 million in the prior-year quarter.

First Watch has more than 440 restaurants in 28 states. The brand is majority owned by Advent International.

Contact Ron Ruggless at [email protected]

Follow him on Twitter: @RonRuggless

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