First Watch Restaurant Group, Inc. Common Stock Piper Sandler 5th Annual Growth Frontiers Conference

Sure. We're just about at the five-year anniversary of our IPO and becoming a public company. At that time, we had set out some long-term growth targets, and I'm proud of the team for delivering on and even exceeding those targets over the five years. One of those was 10% unit growth, low double-digit unit growth. We actually came in a little bit over 11%. We knew that at some point, 10% unit growth would be a challenge as we've grown, especially as quickly as we've grown. We felt like now is a good time to reevaluate that. Again, five years, did what we said we were going to do. Let's look to the next five. We've been the fastest growing full-service restaurant company in America the last five years. We still will be. Providing some clarity and some certainty around how many restaurants we'll open, is something that's helpful for our team, and we think it's helpful in the way we communicate that too.

The focus there was to maintain our fast growth and our industry-leading growth. Also focus on strengthening the balance sheet through free cash flow generation. We looked at a number of different scenarios and felt like this one worked really well for us to accomplish those goals. Yeah, we're excited about that.

Yeah, we haven't quantified externally what that sales transfer is, but what I would say is by capping the unit growth and therefore the percentage reducing, one of the benefits of that will be a reduction in the sales transfer that we've experienced. We haven't really talked much about the sales transfer because we're aware of it. It's not something that happens to us. We plan for it. We burden the new restaurants that we're building with any cannibalization or sales transfer that we expect, and we're pretty good at projecting what that is. The investment hurdle rates reflect that. But it is a natural headwind for Same-Restaurant Sales and traffic that I don't think is fully appreciated because there's frankly nobody growing at the rate we are in casual dining.

That is one of the benefits of our new long-term growth algorithm, especially from a unit count perspective. As far as we're concerned, our team, we did 50 last year, we're going to do around 50 this year. We have the team in place that's ready to do it, and we know how to do it really well. As far as your question about new emerging or core markets, that's really one of the beautiful things about our model, is that we've proven our portability, but more importantly, our consistency across geographies. We have the flexibility to open where we want, when we want. We take a number of things into consideration. We have all of our trade areas mapped out. But there's also an operational consideration and the teams that are needed to open those restaurants.

We never want to overburden one market with too many openings. So that gives us some tremendous flexibility to open geographically where we want, and then the market type, whether it's core, emerging or new. In this past year, we entered the New England market. We now have four here. We entered Las Vegas. We entered Boise, Memphis, so a lot of great new markets for us, and we've been received very, very well.

If we base the future on what we've seen, we don't expect anything to change. It really comes down to the discipline that we apply to our site selection and to our market qualifications and things like that. We know that if we stick to that criteria and don't waver and don't try to talk ourselves into something that's not showing up in our model, that we'll be successful. We have a very high success rate when we do that. As far as the returns go, we don't expect anything different than what we've experienced.