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United States securities and exchange commission logo
July 19, 2021
Christopher A. Tomasso
Chief Executive Officer
First Watch Restaurant Group, Inc.
8027 Cooper Creek Blvd. #103
University Park, FL 34201
Re: First Watch
Restaurant Group, Inc.
Amendment No. 2 to
Draft Registration Statement on Form S-1
Submitted June 21,
2021
CIK No. 0001789940
Dear Mr. Tomasso:
We have reviewed your amended draft registration statement and
have the following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Amendment No. 2 to Draft Registration Statement on Form S-1
Prospectus Summary, page 1
1. We note your statements
that the company is a "high-growth" restaurant and a "leader in
daytime dining." Please
disclose the metrics by which these statements are measured, as
well as the source of
such information (or, if these statement represent management's
belief, please state
that that is the case). Similarly, please disclose the metric by which
Nation's Restaurant
News declared you to be "the fastest-growing full-service restaurant
concept in the United
States." In addition, please clarify what you mean when you refer to
the company's "unique
positioning."
2. Please balance the
disclosure in the Prospectus Summary by discussing the costs,
expenses and losses
incurred or experienced as a result of COVID-19. Please also, to the
Christopher A. Tomasso
First Watch Restaurant Group, Inc.
July 19, 2021
Page 2
extent practicable and material, quanity the various impacts of COVID
discussed in
the risk factor on page 25.
Summary Historical Consolidated Financial and Other Data, page 18
3. Please explain to us why you believe the adjustment for store
pre-opening costs and
related costs used in calculating Adjusted EBITDA, Adjusted EBITDA
Margin, SLEBITDA, and SLEBITDA Margin is appropriate in light of your
growth
strategy. Please refer to Question 100.01 of the SEC Staff's
Compliance and Disclosure
Interpretations on Non-GAAP Financial Measures.
4. With regard to your presentation of margins for the non-GAAP measures
Adjusted
EBITDA and SLEBITDA, please revise to also disclose margins for the
most directly
comparable GAAP measures. Refer to Item 10(e)(1)(i)(A) of Regulation
S-K and non-
GAAP C&DI 102.10.
Risk Factors
Our amended and restated certificate of incorporation will designate the Court
of Chancery of the
State of Delaware...., page 54
5. It is unclear what your statement that your exclusive forum provision
"will not preclude or
contract the scope of exclusive federal jurisdiction for suits brought
under the Exchange
Act or the rules and regulations promulgated thereunder" is intended
to mean. Please
revise to clarify if this provision does not apply to actions arising
under the Exchange Act
and ensure that the exclusive forum provision in the governing
documents states this
clearly.
Key Performance Indicators, page 68
6. For your key performance indicators, please revise to disclose, to the
extent they are
currently missing, how they are calculated; why they are useful to
investors; how the
management uses them to manage or monitor the business; and estimates
or assumptions
underlying the indicators, if any, in accordance with the guidance set
forth in SEC Release
No. 33-10751.
7. We note your disclosure of SLEBITDA and its margin. Given the large
degree of support
activity for your stores at the corporate level and that profits at the
restaurant level would
not exist without the corporate costs, please revise to disclose that
the measure is not
indicative of overall results for the company and that restaurant-level
profit does not
accrue directly to the benefit of shareholders because of
corporate-level expenses
FirstName LastNameChristopher A. Tomasso
excluded from the measure. In order to avoid the impression that this is
a company-wide
Comapany NameFirst
measure Watch
of profit, Restaurant
please Group,
retitle it to Inc.that it is a store-
or restaurant-level measure
indicate
July 19,and to exclude
2021 Page 2 use of the term EBITDA (as it also excludes other
operating expenses).
FirstName LastName
Christopher A. Tomasso
FirstName
First WatchLastNameChristopher
Restaurant Group, Inc.A. Tomasso
Comapany
July NameFirst Watch Restaurant Group, Inc.
19, 2021
July 19,
Page 3 2021 Page 3
FirstName LastName
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations, page 72
8. Please revise to quantify factors to which changes are attributed. For
example, we note
your disclosure that the decrease in restaurant sales during fiscal
2020 as compared to
fiscal 2019 was primarily due to significantly lower restaurant
traffic as a result of the
COVID-19 pandemic and the temporary closure of our dining rooms,
partially offset by
sales recognized in 23 new company-owned restaurants and menu price
increases.
Managements Discussion and Analysis of Financial Condition and Results of
Operations
Liquidity and Capital Resources, page 77
9. Here and elsewhere as appropriate, please discuss whether you expect
the various trends
that emerged during COVID-19, such as the increase in revenue from
mobile ordering and
the increase in costs from third-party delivery fees, to continue in
the future.
Consolidated Statements of Operations and Comprehensive Loss, page F-4
10. You define cost of sales on page F-14 as primarily being comprised of
food and beverage
costs. Please consider retitling this caption on your statement of
operations accordingly
given that labor, paper, and other costs directly associated with
restaurant sales are
presented in other captions.
General
11. We note that the prospectus appears to include market and industry
data. For example, we
note your disclosure that "[y]our deeply experienced restaurant
development team in
partnership with a third-party real estate analytics firm conducted an
in-depth study that
concludes [you] have the potential for 1,787 to 2,232 restaurants
across the United
States." If any of the data relates to publications, surveys or
reports that were
commissioned by you for use in connection with the registration
statement, please file
consents of such third parties pursuant to Rule 436 of the Securities
Act as exhibits to
your registration statement or tell us why you believe you are not
required to do so.
Prospectus Cover Page
12. Please disclose on the prospectus cover page (as you do on page 55)
the ownership
percentage of common stock that funds managed by Advent International
Corporation will
own after the offering, and that Advent will therefore be able to
control corporate
decisions.
Christopher A. Tomasso
FirstName
First WatchLastNameChristopher
Restaurant Group, Inc.A. Tomasso
Comapany
July NameFirst Watch Restaurant Group, Inc.
19, 2021
July 19,
Page 4 2021 Page 4
FirstName LastName
You may contact Stephen Kim at (202) 551-3291 or Lyn Shenk at (202)
551-3380 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Jennifer L pez at (202) 551-3792 or Lilyanna Peyser at (202) 551-3222
with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of Trade &
Services