CEO Chris Tomasso said the daytime café brand is ‘meaningfully scaling’ expenditures this year

First Watch Restaurant Group Inc., operator of the daytime café brand, will be increasing marketing in 2025, executives said Monday.

The Bradenton, Fla.-based company, which Monday released earnings for the fourth quarter ended Dec. 28, said the marketing push is a result of investments it has made in technology.

“After several years of technology investments and associated data collection aimed at improving our marketing efficiency, combined with learnings from tests conducted in 2024, we are meaningfully scaling our marketing spend in 2025,” Chris Tomasso, First Watch president and CEO, said on a call with analysts.

“This effort represents the next step in the continued evolution of our marketing capabilities, which has been years in the making and was not a reaction to the more recent challenging industry traffic,” he said. First Watch’s same-store traffic was negative 3% in the quarter.

Tomasso said the marketing plan would target current customer frequency as well as attract new consumers.

“You should not expect to see First Watch commercials on traditional broadcast television,” he said. “Instead, our approach utilizes a variety of channels to connect with consumers at various stages of the marketing funnel and nurtures that relationship to a first-party connection. Our investments in technology have led to greater tracking, measurement and targeting, resulting in more informed results, and we believe the potential for greater per dollar return than previously achieved.”

While First Watch will increase its marketing spend, Tomasso said he expects the expenditure to be less than average for the restaurant industry.

“We view this as a natural part of our brand’s evolution and see it as a lever to support our long-term growth targets,” Tomasso said. “We do not expect our campaigns to result in traffic-related peaks driven by price promotions, rather an ongoing drumbeat to scale awareness alongside our new restaurant growth.”

First Watch is also working to stabilize traffic in the third-party delivery channels by modifying its approach on the marketplaces. Mel Hope, First Watch chief financial officer, said off-premises traffic is now positive year over year.

Tomasso added: “These modifications, which we instituted early in the first quarter of this year, immediately improved our visibility within the delivery apps and subsequently reversed our trend. I’m pleased to report that traffic is now positive in this channel year to date.”

First Watch is also testing new items to counter consumer pressures.

“We will soon test an expanded line of beverages and have already tested exciting new menu innovations, which have delivered positive early results,” Tomasso said. “We increased meat and potato portions on some of our top-selling menu items and replaced honeydew with more premium fruit such as strawberries, pineapple and blueberries in our fruit bowls.”

The company also brought back complimentary coffee for waiting customers, something that was discontinued during the coronavirus pandemic, he said.

“We spent several years focusing on serving more demand, and in doing so have raised our AUVs [average unit volumes] from $1.6 million in 2019 to $2.2 million today,” Tomasso said. “We now turn our efforts to creating more demand through our continued new restaurant unit growth and burgeoning marketing efforts to expand our presence, increase our awareness and drive our comp restaurant base.”

For the fourth quarter ended Dec. 28, First Watch’s net income was $699,000, or one cent a share, down from $2.6 million, or four cents a share, in the same period a year ago. Revenues were $263.3 million compared to $244.6 million in the prior-year quarter.

Same-store sales were negative 0.3%.

The company opened 50 restaurants in fiscal 2024, with “a record” 25 in the fourth quarter.

As of Dec. 28, First Watch operated 572 restaurants in 30 states.

Contact Ron Ruggless at Ronald.Ruggless@Informa.com

Follow him on X/Twitter: @RonRuggless

Source https://www.nrn.com/family-dining/first-watch-plans-to-increase-marketing-in-2025

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