Why First Watch Restaurant Stock Is Sinking Today
The Motley Fool
by newsfeedback@fool.com (Josh Kohn-Lindquist)February 24, 2026
AI-Generated Deep Dive Summary
Shares of First Watch Restaurant Group (NASDAQ: FWRG) dropped 13% as of 11 a.m. ET on Tuesday following its fourth-quarter earnings report. The sharp decline can be attributed to the company's conservative guidance for 2026, which caused concern among investors despite strong Q4 performance. While First Watch exceeded Wall Street expectations with a 20% sales growth and an EPS of $0.24—triple what analysts predicted—the market reacted negatively to its outlook.
The company's revenue growth projection of 12-14% for 2026 represents a slowdown compared to previous years, as does its same-store sales (SSS) growth forecast of 1-3%. Additionally, the projected store count growth of 9% in 2026 is lower than historical double-digit increases. CEO Chris Tomasso emphasized caution, noting that the broader restaurant category faces challenges amid weak consumer spending.
Despite these concerns, First Watch has demonstrated resilience in a challenging environment. The company outperformed industry trends, with Black Box Intelligence reporting a 1.9% decline in same-store traffic for 2025, while First Watch achieved a modest 0.5% growth. This marks the latest in a series of strong performances, including an 11% increase in store count and 3.6% SSS growth over the full year.
The market's reaction highlights the importance of forward guidance in shaping investor sentiment. While First Watch delivered impressive results in Q4, its cautious projections suggest potential headwinds ahead. The company's ability to navigate these challenges will be closely watched by investors, as it seeks to maintain its strong performance trajectory despite a tougher economic environment.
For finance and investing readers, this story underscores the delicate balance companies must strike between short-term success and long-term planning. First Watch's stock decline serves as a reminder that even stellar current performance can be overshadowed by concerns about future growth. Investors will likely remain focused on the company's
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Originally published on The Motley Fool on 2/24/2026