According to Benchmark, the company holds a leading position in the daytime catering category and continues to grow.

Analyst Todd Brooks began covering First Watch Restaurant Group with a buy recommendation and a price target of USD 23.

The First Watch Restaurant Group Thesis: The company benefits from “strong unit economics” with unit growth of over 10 percent per year, Brooks said in the launch announcement.

Check out other analysts’ stock ratings.

For new units, First Watch Restaurant has a third-year AUV (average unit volume) of $2.6 million, with restaurant-level margins of 18 to 20 percent, the analyst explained. Since new locations have a net construction cost of $1.6 million, the third-year cash-on-cash return for newly built units is around 35 percent, he added.

Growing brand awareness could provide “multi-year tailwinds” for store sales and AUV growth, Brooks said. “With a category-leading market share but only contributing 12% to brand awareness, continuing to expand First Watch’s presence should result in higher brand awareness and increased sales,” he wrote.

The First Watch Restaurant offers the “The runway is expected to quadruple the current branch base,” the analyst explained.

FWRG price promotion: Shares of First Watch Restaurant Group was down 0.73% to $16.98 at the time of publication on Tuesday.

Read more:

Image created using artificial intelligence via Midjourney.