First Watch Restaurant Group, Inc.FWRG

First Watch Restaurant Group, Inc. Leases Disclosure

10-KFiled Feb 24, 20263 min read
Leases
The following table includes a detail of lease assets and liabilities:
(in thousands)Consolidated Balance Sheets ClassificationDECEMBER 28, 2025DECEMBER 29, 2024
Finance lease assets - currentDeposits and other current assets$120 $— 
Operating lease right-of-use assetsOperating lease right-of-use assets614,548 527,674 
Finance lease assetsProperty, fixtures and equipment, net10,730 2,724 
Total lease assets$625,398 $530,398 
Operating lease liabilities (1) - current
Current portion of operating lease liabilities$75,034 $55,704 
Operating lease liabilities - non-currentOperating lease liabilities651,254 555,576 
Finance lease liabilities - currentCurrent portion of long-term debt2,059 587 
Finance lease liabilities - non-currentLong-term debt, net10,847 2,179 
Total lease liabilities$739,194 $614,046 
_____________
(1) Excludes all variable lease expense.
The components of lease expense were as follows:
(in thousands)Consolidated Statements of Operations and Comprehensive Income ClassificationFISCAL YEAR
202520242023
Operating lease expenseOther restaurant operating expenses
Occupancy expenses
Pre-opening expenses
General and administrative expenses		$84,790 $69,908 $56,129 
Variable lease expenseFood and beverage costs
Occupancy expenses
General and administrative expenses		23,292 19,249 17,158 
Finance lease expense:
Amortization of leased assetsDepreciation and amortization1,232 539 507 
Interest on lease liabilitiesInterest expense472 64 92 
Total lease expense (1)
$109,786 $89,760 $73,886 
_____________
(1) Includes contingent rent expense of $2.1 million, $1.8 million and $2.1 million during Fiscal 2025, Fiscal 2024 and Fiscal 2023, respectively.


Supplemental cash flow information related to leases was as follows:
 FISCAL YEAR
(in thousands)202520242023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases$60,065 $48,467 $47,930 
Operating cash flows - finance leases$472 $64 $92 
Financing cash flows - finance leases$(764)$590 $558 
Supplemental information related to leases was as follows:
 FISCAL YEAR
 20252024
Weighted-average remaining lease term (in years)
Operating leases12.713.3
Finance leases10.215.0
Weighted-average discount rate (1)
Operating leases7.8 %7.7 %
Finance leases6.2 %6.2 %
____________
(1) Based on the Company’s incremental borrowing rate.
As of December 28, 2025, future minimum lease payments for operating and finance leases consisted of the following:
(in thousands)
FISCAL YEAROPERATING LEASESFINANCE LEASES
2026$77,739 $1,996 
202788,264 2,558 
202890,268 2,558 
202990,009 2,556 
203090,061 881 
Thereafter736,730 7,652 
Total future minimum lease payments (1)
1,173,071 18,201 
Less: imputed interest(446,783)(5,415)
Total present value of lease liabilities$726,288 $12,786 
_____________
(1) Excludes approximately $130.7 million of executed operating leases that have not commenced as of December 28, 2025.
Sale-Leaseback Transactions
In 2015, Management entered into an agreement relating to the sale and leaseback of the land for use in restaurant operations and received cash proceeds of $3.1 million. As the Company had continuing involvement with the property, the sale of the land did not qualify for sale accounting. As a result, the cash proceeds were recorded as a financing obligation. The balance of the financing obligation was $3.1 million as of December 28, 2025 and December 29, 2024.

Historical Timeline

Fiscal YearFiled
2025Feb 24, 2026Showing above
2024Mar 11, 2025
2023Mar 5, 2024
2022Mar 7, 2023
2021Mar 23, 2022

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

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