First Watch Restaurant Group, Inc. (NASDAQ:FWRG) Q3 2023 Earnings Call Transcript

Jeffrey Bernstein: Sounds good. Thank you.

Operator: Thank you. And our next question comes from Sara Senatore with Bank of America.

Katherine Griffin: Hi, this is actually Katherine Griffin on for Sara. Thanks for the question. I wanted to follow up just on the same-store sales guidance, just given that it looks like the range tightened a little bit higher, 7% to 8% versus 6% to 8% prior, but traffic has edged down. I guess I was just hoping you could elaborate a little bit more on whether you’re expecting more pricing mix? Is it benefit from attached or trade up? Any color there would be helpful. Thank you.

Christopher Tomasso: The only thing that’s really affecting — I’m trying to really understand the question. But anyway, I think I’ve already answered the fact that we do expect to see the transaction piece continue under some pressure. The only thing that would be different in the fourth quarter is that we’re rolling the winter storm, Elliott, right around last year’s holiday period. And so, there’s a — there’s a little bit of that noise in there, but I’m not sure I’m answering your question, but I’m not sure exactly — I’m unsure exactly [Multiple Speakers]

Katherine Griffin: Yes, it’s really, just the traffic, you know, traffic versus price mix component. I think again just sort of following up on the first question, but I appreciate the answer. And that’s fine. On the second question though, we’re just wondering if you’re — since you are raising revenue guidance and new store guidance, but lower CapEx, I’m just curious if we should understand that that means you’re finding ways to build more efficiently, if you’re seeing less inflation in your build cost, any sort of commentary on the build environment as it relates to that guidance.

Christopher Tomasso: Yeah. That’s a good question. I think the answer to that, though, is that really developers have caused us to push out some projects that we had expected to be spending into at this time of the year and we’ve kind of been seeing that leakage throughout the year. So, Eric and his team are working hard to manage new projects and have done a really good job of keeping them on track, but they were — but we would hope to have more projects spending more heavily in the projects in the pipeline right now, but it’s really the pace of developers delivering our new sites, so that we can begin to finish them out and open them faster. So we’re seeing some pace, at which we’re taking delivery slowdown.

Katherine Griffin: Okay. Thank you.

Christopher Tomasso: Yes.

Operator: Thank you. And the next question comes from Andy Barish with Jefferies.

Andy Barish: Good morning, guys.

Christopher Tomasso: Hi, Andy.

Andy Barish: Just wondering on the commodity basket, the update for this year. And then, on some of the key items like eggs and potatoes that you’ve been contacted on, anything to provide for 2024 at this point yet?

Christopher Tomasso: Really not ready to talk about 2024 and we’ll get to that, but we’re kind of sticking to the third quarter, fourth quarter guidance right now.

Andy Barish: Got you. And then just one additional question on the comps. I’m assuming mix was still positive in the quarter, is that correct? And any change on sort of alcohol or the coffee beverage attach or anything like that that would have been a change in what you’ve been seeing?

Christopher Tomasso: Yes, mix remains positive. Our LTOs, our limited time offers, are so popular that — and that always falls into our mix category and they — and so, they’ve remained a real push to our mix. Beverage incidents particularly our new premium iced coffees create a little bit of noise for us, because we’re — it’s a new line and so we’re seeing those mix well, but it’s really a small cohort that we’re looking at since that’s a brand new line.

Andy Barish: And then just one more follow up if I could. Mel, just — you guys have been pointing kind of flattish EBITDA for the quarter, you talked about G&A some deferment into the fourth quarter, anything else that you would point to in terms of the upside versus your expectations.