First Watch Restaurant Group (FWRG) risk factors, FY2024 10-K

Risks Related to Our Business and Industry

1. 01We are vulnerable to changes in economic conditions and consumer preferences that could have a material adverse effect on our business, financial condition and results of operations
2. 02Our financial condition and results of operations are subject to, and may be adversely affected by, a number of other factors, many of which are also largely outside of our control
3. 03If we are unable to open new restaurants, or if planned restaurant openings are significantly delayed, it could have a material adverse effect on our business, financial condition and results of operations
4. 04Our failure to manage our growth effectively could harm our business and results of operations
5. 05Opening new restaurants in existing markets may adversely impact sales at our and our franchisees’ existing restaurants
6. 06A decline in visitors to any of the retail centers, lifestyle centers, or entertainment centers where our restaurants are located could adversely affect our restaurant sales
7. 07Our same-restaurant sales growth may be lower than we expect in future periods
8. 08Our marketing programs and our limited time new offerings may not be successful and could fail to meet expectations, and our new menu items, advertising campaigns and restaurant designs and remodels may not generate increased sales or profits
9. 09Changes in the cost of food could have a material adverse effect on our business, financial condition and results of operations
10. 10New restaurants may not be profitable or may close, and the performance of our restaurants that we have experienced in the past may not be indicative of future results
11. 11We face significant competition for customers, and our inability to compete effectively may affect our traffic, our sales and our operating profit margins, which could have a material adverse effect on our business, financial condition and results of operations
12. 12Food safety and food-borne illness concerns may have an adverse effect on our business by decreasing sales and increasing costs
13. 13The financial performance of our franchisees can have a material adverse effect on our business, financial condition and results of operations
14. 14We have limited control with respect to the operations of our franchisees, which could have a material adverse effect on our business, financial condition and results of operations
15. 15If we are unable to maintain good relationships with our franchisees due to conflicts of interest or otherwise, revenues could decrease and we may be unable to expand our presence in certain markets
16. 16We have a limited number of suppliers and distributors for several of our frequently used ingredients. If our suppliers or distributors are unable to fulfill their obligations under our arrangements with them, we could encounter supply shortages and incur higher costs
17. 17Our system-wide restaurant base is geographically concentrated in the southeast portion of the United States, and we could be adversely affected by conditions specific to that region
18. 18Damage to our reputation and negative publicity could have a material adverse effect on our business, financial condition and results of operations
19. 19Our inability or failure to recognize, respond to and effectively manage the accelerated impact of social media or artificial intelligence could have a material adverse effect on our business, financial condition and results of operations

Risks Related to Information Technology and Intellectual Property

1. 20Information technology system failures or breaches of our network security could interrupt our operations and have a material adverse effect on our business, financial condition and results of operations
2. 21privacy or consumer protection or any inadvertent or unauthorized use or disclosure of data that we store or handle as part of operating our business
3. 22We face potential liability with our gift cards under the property laws of some states
4. 23The failure to enforce and maintain our trademarks and protect our other intellectual property could have a material adverse effect on our business, including our ability to establish and maintain brand awareness
5. 24Litigation with respect to intellectual property assets, if decided against us, may result in competing uses or require adoption of new, non-infringing intellectual property, which may in turn adversely affect sales and revenues

Risks Related to Employees and the Workforce

1. 25Our inability to identify qualified individuals for our workforce could slow our growth and adversely impact our ability to operate our restaurants
2. 26Failure to maintain our corporate culture as we grow could have a material adverse effect on our business, financial condition and results of operations
3. 27Unionization activities may disrupt our operations and increase our costs
4. 28Our sustainability activities, including environmental, social and governance matters, could result in reputational risks, increased costs and other risks

Legal and Regulatory Risks

1. 29We could be party to litigation that could distract management, increase our expenses or subject us to material monetary damages or other remedies
2. 30If we and our franchisees face labor shortages or increased labor costs or health care costs, it could have a material adverse effect on our business, financial condition and results of operations
3. 31We are exposed to risks associated with leasing property subject to long-term and non-cancelable leases and may be unable to renew leases at the end of their terms
4. 32As a public company, we incur significant costs to comply with the laws and regulations affecting public companies, which could harm our business and results of operations
5. 33Fluctuations in our tax obligations and effective tax rate and realization of our deferred tax assets may result in volatility of our results of operations
6. 34Our business is subject to risks related to our sale of alcoholic beverages
7. 35failure to comply with these regulations and obtain or retain licenses could have a material adverse effect on our business, financial condition and results of operations
8. 36We are subject to many federal, state and local laws with which compliance is both costly and complex

Risks Related to Accounting and Financial Reporting Matters

1. 37An impairment in the carrying value of our goodwill or indefinite-lived intangible assets could have a material adverse effect on our financial condition and results of operations
2. 38Changes to estimates related to our long-lived assets and definite-lived intangible assets or operating results that are lower than our current estimates at certain restaurant locations may cause us to incur impairment losses on certain long-lived assets, which may adversely affect our results of operations

Risks Related to Our Indebtedness

1. 39Our level of indebtedness could have a material adverse effect on our business, financial condition and results of operations
2. 40The failure to comply with the covenants under our Credit Agreement or the volatile credit and capital markets could have a material adverse effect on our financial condition

Risks Related to Our Company and Organizational Structure

1. 41The interests of Advent may conflict with our interests or the interests of the holders of our common stock in the future
2. 42First Watch Restaurant Group, Inc. is a holding company with no operations and relies on its operating subsidiaries to provide it with funds necessary to meet its financial obligations and to pay dividends
3. 43For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements, including those relating to accounting standards and disclosure about our executive compensation, that apply to other public companies
4. 44Delaware law and our organizational documents, as well as our existing and future debt agreements, may impede or discourage a takeover, which could deprive our investors of the opportunity to receive a premium for their shares
5. 45The foregoing factors, as well as the significant common stock ownership by Advent could impede a merger, takeover, or other business combination, or discourage a potential investor from making a tender offer for our common stock, which, under certain circumstances, could reduce the market value of our common stock

Risks Related to Ownership of Our Common Stock

1. 46Future offerings of debt or equity securities by us may have a material adverse effect on the market price of our common stock
2. 47In the future, we may attempt to obtain financing or to further increase our capital resources by issuing additional shares of our common stock or by offering debt or other equity securities, including senior or subordinated notes, debt securities convertible into equity or shares of preferred stock
3. 48longer a “controlled company” within the meaning of the rules of the Nasdaq, Advent continues to exert substantial influence over us
4. 49We do not anticipate paying any dividends on our common stock in the foreseeable future
5. 50Our quarterly results of operations may fluctuate significantly and could fall below the expectations of securities analysts and investors due to seasonality and other factors, some of which are beyond our control, resulting in a decline in our stock price
6. 51The market price of our common stock could be adversely affected by sales of substantial amounts of our common stock in the public markets
7. 52The market price of our common stock may decline significantly in connection with any sales by Advent of its common stock. A decline in the price of our common stock might impede our ability to raise capital through the issuance of additional common stock or other equity securities
8. 53We depend on our executive officers and certain other key employees, the loss of whom could have a material adverse effect on our business, financial condition and results of operations
9. 54We might require additional capital to support business growth and this capital might not be available
10. 55Changes in accounting principles applicable to us could have a material adverse effect on our financial condition and results of operations
11. 56Our insurance may not provide adequate levels of coverage against claims