Q2 Earnings Highs And Lows: First Watch (NASDAQ:FWRG) Vs The Rest Of The Sit-Down Dining Stocks

Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at First Watch (NASDAQ:FWRG) and its peers.

Sit-down restaurants offer a complete dining experience with table service. These establishments span various cuisines and are renowned for their warm hospitality and welcoming ambiance, making them perfect for family gatherings, special occasions, or simply unwinding. Their extensive menus range from appetizers to indulgent desserts and wines and cocktails. This space is extremely fragmented and competition includes everything from publicly-traded companies owning multiple chains to single-location mom-and-pop restaurants.

The 13 sit-down dining stocks we track reported a slower Q2. As a group, revenues were in line with analysts’ consensus estimates.

Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate and future cuts (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.

In light of this news, sit-down dining stocks have held steady with share prices up 3.3% on average since the latest earnings results.

First Watch (NASDAQ:FWRG)

Based on a nautical reference to the first work shift aboard a ship, First Watch (NASDAQ:FWRG) is a chain of breakfast and brunch restaurants whose menu is heavily-focused on eggs and griddle items such as pancakes.

First Watch reported revenues of $258.6 million, up 19.5% year on year. This print was in line with analysts’ expectations, and overall, it was a strong quarter for the company with a solid beat of analysts’ earnings estimates.

“We are pleased with our second quarter results and proud of our teams for delivering exceptional experiences for our customers and employees. Amidst a challenging backdrop, which we view as transitory, we are operating our restaurants at a very high level and with tremendous efficiency, as exemplified by our adjusted EBITDA growth, high customer satisfaction scores, improved employee turnover and accelerated ticket times,” said Chris Tomasso, First Watch CEO and President.

Interestingly, the stock is up 8.2% since reporting and currently trades at $15.44.

Is now the time to buy First Watch? Access our full analysis of the earnings results here, it’s free.

Best Q2: BJ's (NASDAQ:BJRI)

Founded in 1978 in California, BJ’s Restaurants (NASDAQ:BJRI) is a chain of restaurants whose menu features classic American dishes, often with a twist.

BJ's reported revenues of $349.9 million, flat year on year, in line with analysts’ expectations. The business had a very strong quarter with a solid beat of analysts’ earnings estimates.

Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 13% since reporting. It currently trades at $32.40.

Is now the time to buy BJ's? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: Denny's (NASDAQ:DENN)

Open around the clock, Denny’s (NASDAQ:DENN) is a chain of diner restaurants serving breakfast and traditional American fare.

Denny's reported revenues of $115.9 million, flat year on year, falling short of analysts’ expectations by 2.6%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.

As expected, the stock is down 12% since the results and currently trades at $6.75.

Read our full analysis of Denny’s results here.

Darden (NYSE:DRI)

Started in 1968 as the famous seafood joint, Red Lobster, Darden (NYSE:DRI) is a leading American restaurant company that owns and operates a portfolio of popular restaurant brands.

Darden reported revenues of $2.76 billion, flat year on year. This print missed analysts’ expectations by 1.5%. It was a slower quarter as it also logged a miss of analysts’ earnings estimates and underwhelming earnings guidance for the full year.

The stock is up 5.5% since reporting and currently trades at $167.95.

Read our full, actionable report on Darden here, it’s free.

Brinker International (NYSE:EAT)

Founded by Norman Brinker in Dallas, Texas, Brinker International (NYSE:EAT) is a casual restaurant chain that operates under the Chili’s, Maggiano’s Little Italy, and It’s Just Wings banners.

Brinker International reported revenues of $1.21 billion, up 12.3% year on year. This print surpassed analysts’ expectations by 3.8%. Taking a step back, it was a strong quarter as it also produced full-year revenue guidance beating analysts’ expectations.

Brinker International achieved the biggest analyst estimates beat and highest full-year guidance raise among its peers. The stock is up 9.2% since reporting and currently trades at $76.80.

Read our full, actionable report on Brinker International here, it’s free.

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