Consumer still cares about hospitality: First Watch CEO
First Watch (FWRG) is an American restaurant chain that serves breakfast, brunch, and lunch, with over 500 locations across 29 states. First Watch Restaurant Group CEO Chris Tomasso joins Yahoo Finance to discuss consumer outlook for 2024.
"The consumer still cares very much about ... hospitality and about gathering, and I think there's an underlying optimism," Tomasso notes. "(The company's) dining room traffic has been up."
"Consumer confidence is up," Tomasso adds. "There's a consumer selected quality right now. They want reliable, consistent, friendly service that's at a value and high quality foods. And that's what we deliver."
Click here to watch the full interview on the Yahoo Finance YouTube page or you can watch this full episode of Yahoo Finance Live here.
Video Transcript
BRAD SMITH: Well, several companies warning of an anticipated consumer spending slowdown in the year ahead. But what are restaurants seeing? And how are they navigating that possible headwind?
First Watch is a daytime dining concept serving breakfast, brunch, and lunch with more than 500 locations across 29 states. Shares of the company are up more than 45% since the year began. Significantly outpacing the S&P 500 versus watches market cap currently surpasses $1 billion.
Joining us with his consumer outlook is Chris Tomasso, who is the First Watch Restaurant Group CEO. You know, I've been to one of your fine locations in Newark, Delaware, so I've had my own experience over at First Watch. Tell us, though, what are you seeing in the appetite of the consumer right now based on the ticket size, based on what they're ordering, and the amount of visits that are taking place?
CHRIS TOMASSO: Yeah, I think we're seeing that the consumer still cares very much about hospitality and about gathering. And I think there's an underlying optimism. We mentioned on our third quarter earnings call that our dining room traffic has been up. The consumer is opting for the full experience when they come into our restaurants, so they're getting that extra beverage, they're getting that shareable.
So, the fact that they're doing that for us is a great sign. I do believe that consumer confidence is up. I think that what consumers look for in restaurants are consistency, value. And I mentioned that in-- previously, that there's a consumer flight to quality right now. They want reliable, consistent, friendly service that's at a value, and high quality foods, and that's what we deliver. And so, we feel good about the rest of the year.
SEANA SMITH: Chris, in your last earnings call, you also mentioned the fact that some of those inflationary pressures seem to be easing just a bit. Are you passing some of those cost saving measures along to consumers? And what are you doing as a result here, more broadly speaking, for your menu pricing?
CHRIS TOMASSO: Yeah, so we've actually been probably one of the most conservative restaurant companies as it relates to menu pricing. So, we felt like what was being experienced was transitory. So we didn't want to make a long term permanent decision based on something that we believe was not going to be a permanent impact.
And so, that's how we've addressed it. And I think our focus on having more visitors in the restaurant, so increasing traffic and not turning them away by over pricing. And then, therefore, turning to discounting, which we don't do.
We've just been very conservative on pricing leading up to it. And I think that's why we've seen the performance that we've had because of those decisions that we made over the past, really, 18 months, as it relates to pricing.
