FWRGFirst Watch Restaurant Group, Inc.
Is the business good?
The checks split: earnings fully cash-backed (5.8×), but margins compressing.
Operating profit is fully backed by cash. Conversion is worsening vs a year ago.
Positive operating leverage, operating profit is growing faster than sales, so margins widen as the business scales.
A balanced mix of margins, efficiency, and leverage. ROE 2% = margin × turnover × leverage.
Unless marked, from derived.
Where this answer is blind. The F-score rewards improvement, so an already-elite company can score mid-pack.
How good a business is FWRG?
First Watch Restaurant Group, Inc. earns 2.5% on the capital it employs against a 9.0% cost of capital, so growth costs more than it returns.
Return on invested capital · cost of capital 9.0% · 6.5 points below what the capital costs: growth destroys value
- Operating margin
- 2.1%
Operating margin · Restaurants median 7.8% · 12 months to Q2 2026
- Cash conversion
- 5.75×
Cash conversion · 9.76× a year ago · operating cash flow covers the operating profit after tax
- Share count, year on year
- −0.45%
Share count, year on year · flat: no meaningful dilution
| Year | Operating margin |
|---|---|
| FY2020 | −14% |
| FY2021 | 3.7% |
| FY2022 | 2.3% |
| FY2023 | 4.6% |
| FY2024 | 3.8% |
| FY2025 | 2.3% |
Details›
- Gross margin12 months to Q2 2026
- 84%
- Operating margin12 months to Q2 2026
- 2.1%
- Net margin12 months to Q2 2026
- 1.4%
- Free cash flow margin
- −1.6%
- Revenue, trailing twelve months
- $1.32B
- Free cash flow, trailing twelve months
- −$21M
- Net income, trailing twelve months
- $18M
- Return on invested capitaloperating profit after tax ÷ debt + equity − cash
- 2.5%
Margins, capital and share counts from the statements as filed with the SEC; cash conversion is operating cash flow over operating profit after tax.