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February 3, 2020
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.
Draft Registration Statement on Form S-1
Submitted January 8, 2020
CIK No. 0001789940
Dear Mr. Tomasso:
We have reviewed your 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.
Draft Registration Statement on Form S-1 Filed January 8, 2020
Inside Front Cover Pages
Non-GAAP Financial Measures, page ii
1. We note your disclosure regarding the non-GAAP financial measures.
Please tell us your
consideration of Question 102.10 of the Compliance & Disclosure
Interpretations on Non-
GAAP Financial Measures and providing this discussion elsewhere with
reconciliations to
the most directly comparable financial measures calculated and presented
in accordance
with GAAP.
Christopher A. Tomasso
FirstName LastNameChristopher A. Tomasso
First Watch Restaurant Group, Inc.
Comapany NameFirst Watch Restaurant Group, Inc.
February 3, 2020
Page 2
February 3, 2020 Page 2
FirstName LastName
Prospectus Summary
Strong Restaurant Productivity and Proven Profitability, page 4
2. Please explain or define at first use the term "designated market
areas" or "DMAs".
Risk Factor
We have limited number of suppliers and distributors..., page 23
3. We note your disclosure that you purchase "100% of [y]our pork from
two suppliers,"
"100% of [y]our eggs from two suppliers," "100% of your coffee from
one supplier" and
"80% of [y]our avocados from one supplier." Please disclose the
material terms of these
agreements and tell us what consideration you have given to the filing
of these
agreements. Please refer to Item 601(b)(10) of Regulation S-K.
Our amended and restated bylaws will designate the Court of Chancery of the
State of
Delaware..., page 44
4. We note that your amended and restated bylaws will provide that the
Court of Chancery of
the State of Delaware shall be the sole and exclusive forum for any
derivative action or
proceeding brought on your behalf. Please revise your disclosure here
and on page 101 to
disclose whether this provision applies to actions arising under the
Securities
Act or Exchange Act. In that regard, we note that Section 27 of the
Exchange Act creates
exclusive federal jurisdiction over all suits brought to enforce any
duty or liability created
by the Exchange Act or the rules and regulations thereunder, and
Section 22 of the
Securities Act creates concurrent jurisdiction for federal and state
courts over all suits
brought to enforce any duty or liability created by the Securities Act
or the rules and
regulations thereunder. If the provision applies to Securities Act
claims, please also revise
your prospectus to state that there is uncertainty as to whether a
court would enforce such
provision and that investors cannot waive compliance with the federal
securities laws and
the rules and regulations thereunder. If the provision does not apply
to actions arising
under the Securities Act or Exchange Act, please ensure that
the exclusive forum provision in the amended and restated bylaws
states this clearly.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations, page 58
5. A significant portion of your results of operations disclosure is
dedicated to stating dollar
amounts. Please expand your discussion to provide a more detailed
explanation of
the underlying reasons for these amounts and any changes in your
results of
operations. We remind you that the objectives of Management s
Discussion and Analysis
include providing your investors with the opportunity to view your
results of operations
and liquidity through the eyes of your management and providing your
investors with
the context within which financial information should be analyzed.
Please refer to
Item 303 of Regulation S-X.
Christopher A. Tomasso
FirstName LastNameChristopher A. Tomasso
First Watch Restaurant Group, Inc.
Comapany NameFirst Watch Restaurant Group, Inc.
February 3, 2020
Page 3
February 3, 2020 Page 3
FirstName LastName
Selected Operating Data, page 59
6. Please provide a footnote to the non-GAAP measures presented with a
cross-reference to
the disclosures required by Item 10(e) of Regulation S-K.
Alternatively, please revise to
provide the disclosures here.
Qualitative and Quantitative Disclosure About Market Risk, page 66
7. We note the debt incurred under your Senior Credit Facilities exposes
you to interest rate
risk. Further, we note there were $195.4 million outstanding
borrowings, excluding
unamortized debt discount and deferred issuance costs, under your
credit facilities as of
December 31, 2018. Please revise to include quantitative disclosures
about interest rate
risk in one of the three disclosure alternatives set forth in Item 305
of Regulation S-K.
Business
Proven Record of Sustained Growth, page 68
8. We note your disclosure that you have consistently experienced
"positive annual same-
restaurant traffic growth, averaging 1.4%." Please define the term
"same-restaurant traffic
growth."
How We Intend to Grow Sales and Profits
Drive Restaurant Traffic and Build Sales, page 72
9. We note placeholders for the percentage of customers that purchased
from your seasonal
menu, Fresh Juices and Shareables in 2019. Please tell us what
consideration you have
given to quantifying 2018 percentages to provide additional context
for investors.
We Are Disrupting a Massive Category
Future Platforms and Initiatives, page 72
10. We note your disclosure that you "intend to evolve [y]our mobile app
and the Sun eClub
email program, which currently has more than 1.5 million members, to
reduce customer
friction and enhance targeted campaigns to increase customer
frequency." Please tell us
what you mean by "reduce customer friction" and further discuss the
nature of your Sun
eClub email program, if material. For example, clarify if the Sun
eClub email program is
a loyalty program or only provides for targeted campaigns.
Financial Statements
Notes to Consolidated Financial Statements
Note 1. Nature of Business and Organization, page F-7
11. We note the numbers of company-owned restaurants and franchised
restaurants disclosed
in the last sentence of this section do not agree with those on page
75. Please reconcile
these differences.
Christopher A. Tomasso
First Watch Restaurant Group, Inc.
February 3, 2020
Page 4
General
12. Please disclose the basis for all your assertions about your
competitive position within
your industry. If you do not have appropriate independent support for
a statement,
please revise the language to make clear that this is your belief
based upon your
experience in the industry, if true. Please also provide independent
supplemental
materials, with appropriate markings and page references in your
response. The following
are examples only of some of your competitive position assertions:
"The restaurant industry captured two additional breakfast visits
per capita, from
2015 to 2018, and with 78% of breakfasts still being prepared at
home as of 2019,
morning restaurant traffic provides a compelling long-term
opportunity for future
growth," on page 3
"Our restaurant-level general manager turnover averaged 19.3% in
fiscal 2019, which
is meaningfully lower than the industry-reported average of 43%,"
on pages 4 and
71.
You may contact Stephen Kim, at 202-551-3291 or Donna Di Silvio, at
202-551-3202, if
you have questions regarding comments on the financial statements and related
matters. Please
contact Jennifer Lopez, at 202-551-3792 or Lilyanna Peyser, at 202-551-3222
with any other
questions.
FirstName LastNameChristopher A. Tomasso Sincerely,
Comapany NameFirst Watch Restaurant Group, Inc.
Division of
Corporation Finance
February 3, 2020 Page 4 Office of Trade &
Services
FirstName LastName