Thank you for standing by, and welcome to the First Watch Restaurant Group Inc's Fourth Quarter Earnings Conference Call occurring today, March 11th, 2025, at 8:00 A.M. Eastern Time. Please note that all participants are currently in listen-only mode. Following the presentation, the conference call will be open for analyst questions, and instructions on how to ask a question will be given at that time. This call will be archived and available for replay at investors.firstwatch.com under the news and events section. I would now like to turn the conference over to Steven Marotta, Vice President of Investor Relations at First Watch, to begin. Thank you. Hello everyone. I am joined by First Watch's Chief Executive Officer and President Chris Tomasso and Chief Financial Officer Mel Hope. This morning, First Watch issued its earnings release for the fourth quarter of fiscal 2024 on GlobeNewswire and filed its annual report on Form 10-K with the SEC. These documents can be found at investors.firstwatch.com. This conference call will include forward-looking statements that are subject to various risks and uncertainties that could cause the company's actual results to differ materially from these statements. Such statements include without limitation statements concerning the conditions of the company's industry and its operations, performance and financial condition, outlook, growth plans and strategies, and future expenses. Any such statements should be considered in conjunction with cautionary statements in the company's earnings release and the risk factor disclosure in the company's filings with the SEC, including our annual report on Form 10-K. First Watch assumes no obligation to update these forward-looking statements, whether a result of new information, future developments, or otherwise, except as may be required by law. Lastly, management's remarks today will include references to various non-GAAP measures, including restaurant-level operating profit, restaurant-level operating profit margin, adjusted EBITDA, and adjusted EBITDA margin. Investors should review the reconciliation of these non-GAAP measures to the comparable GAAP results contained in the company's earnings release filed this morning. During today's call, references to same restaurant sales and traffic growth compared to the 13-week periods ended December 29, 2024, and December 31, 2023, in order to compare like-to-like periods. Otherwise, any reference to percentage growth when discussing fourth quarter performance is a comparison to the fourth quarter of 2023 unless otherwise indicated. I will turn the call over to Chris. Good morning. Thank you all for joining us to discuss our fourth quarter 2024 financial results and our outlook for 2025. Thank you to our more than 15,000 employees who wake up early every day to make days brighter for our customers and each other. These results are the product of their extraordinary efforts. 2024 was a pivotal year for First Watch, just not in the typical way. I'm particularly proud of how our teams operated during the year, driving our total revenue to over $1 billion and our Adjusted EBITDA to over $100 million for the first time in the company's more than 40-year history. Despite the adverse conditions faced by consumers, which pressured restaurant industry sales, we controlled the controllables and in the process increased labor efficiency, improved restaurant-level operating profit margins, reduced ticket times, improved employee turnover, and raised our already exceptional customer experience scores. I'm also proud of what we did not do in 2024. We differentiated ourselves by refraining from aggressive price promotions, which were widespread across all day parts. Above all, we stayed true to who we are, which is a trait that has served us well through every environment. As a result, the First Watch brand entered 2025 in a position of strength, committed to serving an elevated daytime dining experience and to providing our customers with value. Importantly, we opened 50 new restaurants in 2024, including a record 25 in the fourth quarter alone. On average, restaurants we opened in 2024 are on pace to generate third-year sales of $2.6 million, or about 20% above our current system average unit volumes, with a projected cash-on-cash return above 35% and IRR above 22%. The pace of our new restaurant development and our proven site selection principles creates a formidable growth engine that contributes to our ability to fulfill First Watch's long-term annual goals of mid-teens% increases in revenues and Adjusted EBITDA. We've identified vast white space for First Watch throughout the U.S., which continues to affirm our strategy to reach 2,200 locations in the continental U.S. It's not a matter of if; it's a matter of when. For more than four decades, First Watch has grown largely via word of mouth. While we're proud that loyal customers love and recommend us, as our national footprint has grown, we recognize our opportunity to raise brand awareness via smart, targeted marketing efforts. After several years of technology investments and associated data collection aimed at improving our marketing efficiency, combined with learnings from tests conducted in 2024, we are meaningfully scaling our marketing spend in 2025. This effort represents the next step in the continued evolution of our marketing capabilities, which has been years in the making and was not a reaction to the more recent challenging industry traffic. Our broad-based iterative approach utilizes various media strategies that target current customer frequency as well as attract new consumers to the First Watch brand. Historically, marketing campaigns aimed at increasing a restaurant's brand awareness were anchored by a significant investment in advertising on national media. You should not expect to see First Watch commercials on traditional broadcast television. Instead, our approach utilizes a variety of channels to connect with consumers at various stages of the marketing funnel and nurtures that relationship to a first-party connection. Our investments in technology have led to greater tracking, measurement, and targeting, resulting in more informed results, and we believe the potential for greater per dollar return than previously achieved. Given these new capabilities, we are funding the cost of our 2025 customer targeting strategy with both the reallocation of existing dollars and increased investment, and expect to drive a return to positive guest counts in 2025. While this investment represents a significant step up for us, we believe that as a percent of sales, our planned investment in marketing remains below the industry average. We view this as a natural part of our brand's evolution and see it as a lever to support our long-term growth targets. We do not expect our campaigns to result in traffic-related peaks driven by price promotions, rather an ongoing drumbeat to scale awareness alongside our new restaurant growth. Later this year, we also plan to launch enhanced customer-facing technologies as part of our ongoing journey to improve both the customer and employee experience. These include, but are not limited to, a custom-built waitlist experience, a new menu experience with dynamic nutrition and allergen tools, new ordering capabilities, and a personalized offer wallet. We will build on these levers for continued growth over the next several years. As I mentioned on our third quarter conference call, in an effort to stabilize traffic in the third-party delivery channel, we partnered with our platform providers to modify our approach and improve our effectiveness. These modifications, which we instituted early in the first quarter of this year, immediately improved our visibility within the delivery apps and subsequently reversed our trend. I'm pleased to report that traffic is now positive in this channel year to date. We know that the consumer is facing a lot of pressure everywhere they turn these days. Our instinctive response is to reinvest in the customer experience through innovation, heightened hospitality, and enhanced value. Our highly anticipated seasonal menus continue to delight our customers, which was on full display with our current Jump Start menu and its eye-catching and craveable Parmesan Prosciutto Toast. We'll soon test an expanded line of beverages and have already tested exciting new menu innovations, which have delivered positive early results. We increased meat and potato portions on some of our top-selling menu items and replaced honeydew with more premium fruit such as strawberries, pineapple, and blueberries in our fruit bowls. We brought back complimentary coffee while you wait, something our customers loved and we did for more than 30 years before it was discontinued for safety reasons during COVID. This Invest in the Guest philosophy is nothing new for us. It is yet another way in which we extend hospitality and a key factor in how we've remained relevant and driven a high-value perception with our customers for many years. Being the category leader in the daytime dining segment has many advantages. Scale is atop of the list. This is where our scale matters. Scale is the difference between new restaurant openings at A locations in the epicenter of the trade area versus openings in second-rate B or C locations. Scale is the difference between accelerating unit growth and expanding our footprint while others in our segment pull back or close underperforming units. Scale is the difference between an elevated menu offering with dynamic seasonal menus highlighting fresh, in-season ingredients versus highly commoditized breakfast offerings. Scale is the difference between a strong supply chain versus scrambling for key ingredients in challenging times. Quite simply, in good times and not-so-good times, our scale positions us to power through challenges better than anybody else in our space, especially those that are highly franchised, which inherently have less control over menu pricing. Strategically and historically, our disciplined approach considers pricing only to long-term inflationary trends, not to transitory commodity spikes, and we will do the same in 2025. Similar to the avian flu experience in 2022, after taking no price in 2021, our modest pricing that year looked through the short-lived spike in egg costs, which rolled off in the following year and spurred market share gains for us in the meantime. I'm also excited about the opportunities that lie ahead in 2025. Our real estate and people pipelines are robust and well-positioned to support our ambitious yet highly achievable unit growth targets. We're bullish on our ability to bring our unique breakfast, brunch, and lunch offering to new markets such as New England, where we've already been welcomed with open arms, and Las Vegas, where we expect to open in the second half of the year, while we continue to build out our core and emerging markets. We spent several years focusing on serving more demand and in doing so have raised our AUVs from $1.6 million in 2019 to $2.2 million today. We now turn our efforts to creating more demand through our continued new restaurant unit growth and burgeoning marketing efforts to expand our presence, increase our awareness, and drive our comp restaurant base. Every year inevitably presents unique challenges, whether it be a pandemic, supply shortages, traffic malaise, national and global crises, or outsized inflation. We approach them all the same way, with a long view. We control the controllables year in and year out and along the way take share and expand scale to set up a stronger tomorrow. Now I'd like to turn it over to Mel. Thank you, Chris, and good morning. As Chris referenced in his opening remarks, our restaurant managers and crews continued the efficient operation of our restaurants in the fourth quarter as they did throughout all of 2024. They further improved our employee turnover, generated faster ticket times, and posted better customer service scores compared to the prior year. Total fourth quarter revenues were $263.3 million, an increase of 16.8%, excluding the impact of the 53rd week in 2023. Our top-line growth in the fourth quarter is attributed to the 145 non-comp restaurants, including the 43 company-owned new restaurant openings and the 28 acquired franchise locations since the third quarter of 2023. This was partially offset by negative same restaurant sales of 0.3%, which includes a same restaurant traffic decline of 3%. In the fourth quarter, our in-restaurant dining traffic was stronger than our off-prem traffic. However, as Chris mentioned, early in 2025, we implemented changes to our delivery program. This has driven improvement in the third-party delivery sales channel, resulting in higher traffic year to date and is now positive year over year. On the food cost front, food and beverage expense was 22.7% of sales compared to 22.5% in the same period last year, as a percent of sales costs benefited from carried pricing of 2.9%, offset by commodity inflation of 2.4%. Excluding marketing incentives in the first month of the quarter, food and beverage as a percent of sales would have been flat versus the same period a year ago. During the quarter, restaurant-level labor inflation was 4.3%. Labor and other related expenses were 33.7% of sales in the fourth quarter, a 20 basis point improvement from 33.9% reported in the fourth quarter of 2023. Our increased labor efficiency, combined with carried pricing, offset the impact of labor inflation in the fourth quarter. We achieved restaurant-level operating profit margin of 18.8% in the fourth quarter of 2024. Excluding the impact of the 53rd week in 2023's results, restaurant-level operating profit margin would have been even with the fourth quarter of 2023. Income from operations margin was 1.5%. At $30.7 million, general and administrative expenses were 11.7% of fourth quarter revenue, which was favorable to the prior year by 50 basis points. Adjusted EBITDA was $24.3 million, a nearly $5 million increase versus the $19.6 million reported last year, excluding the contribution of the 53rd week. Adjusted EBITDA margin grew to 9.2% as compared to the 8.7% margin we realized in the fourth quarter of 2023, again excluding the impact of the 53rd week in 2023. Net income was $700,000, and net income margin was 0.3%. With the 25 new system-wide restaurants opened during the fourth quarter, of which 23 are company-owned and two are franchise-owned, we ended the fourth quarter with 572 restaurants. Our new restaurant openings are a key contributor to our growth. Not only did new restaurants increase our revenue and profits, they extend our leadership in the daytime dining segment. They increase our brand awareness, and they provide attractive personal and professional growth opportunities for our employees, which we believe also contributes to our leading retention and turnover rates. For your financial modeling purposes, the net effect of acquisitions, which includes only the impact of purchases made within the last 12 months, increased fourth quarter revenue by about $12 million and Adjusted EBITDA by about $3 million and full year by about $58 million and $13 million, respectively. For further details on our fourth quarter, please review our supplemental materials deck on our investor relations website beneath the webcast link. Before providing guidance for 2025, we'd like to offer some additional color on the inflation in key commodities. Although we contract annually for our eggs, which ensures our supply and protects us from the most severe price volatility, the continuing impact of the avian influenza has necessitated that our egg supply will be supplemented with purchases subject to spot market pricing. This obviously increases our overall egg cost. Additionally, prices of avocados, bacon, and coffee beans are elevated as well. Year to date, our commodity inflation is tracking at high single-digit% inflation, and we expect much of the higher pricing to be sustained throughout the year. Our full-year expectation for commodity inflation and Adjusted EBITDA have contemplated these higher costs as well as the recently announced tariffs. Now I'd like to provide our initial outlook for 2025. We're expecting same restaurant sales growth to be positive low single digits with flat to slightly positive same restaurant traffic. Our same restaurant sales growth guidance includes a 1.3% price action implemented in January, which implies carried pricing of around 2.8% in the first quarter and 2% for the full year. As a reminder, historically, our disciplined price actions aim to offset what we perceive to be permanent inflation, not transitory spikes. We expect total revenue growth of around 20% with a net 400 basis point impact from acquisitions completed or announced, assuming the timely closing of announced acquisitions. We expect a total of 59-64 net new system-wide restaurants, including 55-58 company-owned restaurants and 7-9 franchise-owned restaurants, with three planned company-owned restaurant closures due to lease expirations. Our company-owned new restaurant development pipeline is weighted in the second half of 2025, Q4 in particular. We expect full-year commodity inflation percentage increase in the high single digits driven by recent increases in eggs, pork, coffee, and avocados, as well as the tariffs. Restaurant-level labor inflation is expected to be in the range of 2%-4%. Our Adjusted EBITDA guidance range is $124 million-$130 million, with the net impact from acquisitions expected to contribute about $8 million to our Adjusted EBITDA this year, assuming the timely closing of announced acquisitions. We expect a blended tax rate in the range of 31-33%. We expect capital expenditures of $150 million-$160 million, not including the capital allocated to franchise acquisitions. While we do not typically provide quarterly earnings guidance, we believe you may find a number of current considerations helpful to your models. As we have discussed, our new restaurants operate at less efficient margins, with the first 120 days having the steepest climb to maturity. The company's overall profitability in the first quarter of 2025 will be affected by the record number of new company-owned restaurants opened in the fourth quarter of 2024, in addition to the 10 or so expected in the current quarter. Combined with the recent spikes in key commodity prices, we expect Adjusted EBITDA in the first quarter of 2025 to be around $4 million below the first quarter of 2024. Note also that we expect 50%-55% of our Adjusted EBITDA for the year will be generated in the second half of 2025. Additionally, we enjoyed positive same restaurant traffic in the month of January, though with unseasonably cold weather and a weaker industry backdrop, February proved more challenging, posting negative low single-digit same restaurant traffic. While we expect same restaurant traffic to be slightly negative for the first quarter, our guidance contemplates positive traffic for the balance of 2025. Lastly, we remain highly confident in our growth prospects. As such, we're reiterating our long-term annual financial targets, including NRO% growth in the low double digits, same restaurant sales growth of around 3.5%, restaurant sales and Adjusted EBITDA percentage growth in the mid-teens. Operator, if we could open the line now for questions. Yes, thank you. We will now be conducting a question-and-answer session. If you would like to ask a question at this time, please press star one from your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for our first question. Thank you. Our first question is from the line of Jeffrey Bernstein with Barclays. Please proceed with your questions. Good morning, Jeff. Good morning. Thank you very much. Two questions. The first one, just on the current comp trends. Many have spoken of weather and holiday shifts pressuring the first quarter, quarter-to-date comps. It sounds like you had some impact in February. Any concern of a slowing macro beneath the surface that is perhaps being masked by these transitory headwinds? That would seem to be contrary to your assumption for a return to positive traffic rest of year, just trying to gauge whether there's something more going on than perhaps just something transitory. Maybe you've seen something in consumer behavior, income levels, or anything along those lines that you can share in terms of your confidence in those comps. Then one follow-up. Sure. It's hard to say, Jeff, but we feel good about the direction that we've seen for our business. Our Q4 traffic was better than Q3, and our Q1-to-date traffic is better than Q4. We are seeing a positive trend. Understood. In terms of the marketing you talked about, I think you mentioned meaningfully scaling that. Definitely an area of interest. Obviously, you seem pleased with your fourth-quarter test. I'm just wondering how 2025 is going to look different than 2024. Maybe what components have you most excited or how you're thinking about the dollars to spend? I think you said percentage of sales is still below peers, but any color you could share in terms of the spend you're going to be doing and where you think you're going to get the best bang for the buck. Thank you. Sure. I'll take that one too. Yeah, we're really excited about the results that we've seen from the marketing campaigns and initiatives that we tested in 2024. As I said on our last call and at ICR, we've basically taken the best of what we tested and put that into our plan. It's fully contemplated in our plan, the expenses. It's a big step up for us from a spend standpoint. You've been following us for a long time. You know how that's been. It's been a pretty low percent of sales for us, but we're really encouraged by the results we got. We've got that built into the plan, and that's kind of one of the major factors that drove our guidance. Thank you. Our next questions are from the line of Andrew Charles with TD Cowen. Please proceed with your questions. Morning, Andrew. Great. Thanks. Hey, guys. Very helpful details around the high single-digit commodity inflation. Just on the egg side, what are you specifically seeing there? I know you said you had to go outside of the network to buy some spot prices as well. Just remind us, I guess, on the egg side, I believe in the past you've quantified eggs and potatoes together as a mix of your commodity basket. Can you provide an update of that as well? Yeah. The eggs and potatoes roughly run about 15% of our market basket. What was the—I'm sorry, Andrew. What was the first question? Just any color on the eggs? Yeah. Just eggs in particular. As you guys got into high single-digit inflation for the full year, and you're seeing that quarter-to-date, how much of that is just being driven by the eggs component of it? The overall inflation, we're not breaking down into components, but we do eggs. I don't know the portion that we're buying on the open market right now, but overall, our eggs, we contract for that price on an annual basis. During this time, when there is diminished flocks, we're having to supplement the supply, and that's causing some additional adder cost or a surcharge on top of our negotiated price. That's really where the inflation associated with the eggs are concerned. In terms of time frame, I've said before, we're pretty finicky about the quality of our eggs and the type of eggs. Therefore, in order for the flocks that produce the sort of eggs that we use, it will take the better part of the year, we understand, before we see some sufficiently mature flocks to start producing the kind of eggs that we look for, assuming there is no more flock depopulation. That's helpful. Chris, quick follow-up. I think you articulated well the reason why you want to keep pricing modest, only taking 1.3% pricing in January despite the severe amount of inflation you guys are seeing. Just curious, how open-minded are you that if this persists, your level of willingness to potentially revisit the pricing decision later in 2025? Yeah. We're going to follow the same cadence we do every year. It has served us well for a number of years where we take a price increase at the beginning of the year based on what we expect the commodity or just the overall inflation, labor, and commodities to be. We're always planning to take a mid-year look and see where we are, see if anything's changed for the good or the other way, and we'll approach it that way. In years of what I would call outsized inflation, as I mentioned in the opening, we may or may not price to cover all of it. We may make a strategic decision based on the long-term health of the business, again, not to make a permanent pricing decision on something that we see as a transitory issue, which we feel avian influenza is right now. We experienced that in 2022. I talked about that a little bit. We certainly did not price to cover that inflation, which I think was over 13% that year. That helped us grow traffic since then, and we are going to take that same kind of approach mid-year here. We are open to it, Andrew. We know what the pressure that the consumer is under, and we want to make sure that we are thoughtful about it. Makes sense. Thank you. The next question is from the line of Sara Senatore with Bank of America. Please proceed with your questions. Thank you. I wanted to ask about your approach to value. I guess you said, and maybe it's a two-part, you're emphasizing value without doing deep discounts. I guess, do your customers recognize that? Is that the feedback you're getting, or how can you tell that that's the case versus something that's a little louder? I guess in that same vein, even though you do have to buy on the spot, I suspect your inflation is still a lot lower than maybe what your competitors are seeing, who haven't locked in any, and certainly what we're seeing in grocery stores. Is that an opportunity for you to kind of emphasize your value gap or expand it further? I have just a quick follow-up on advertising, please. Sure. I'll take the first part and then let Mel speak to the inflation. I'll just say that the focus on communicating our everyday value was something that kind of came to light in the marketing testing with the messaging. We tested a number of different messages, creative and those type of things. In the past, where you've seen us focus on our seasonal menus and perhaps some of the more, I'd call them, what's the word I'm looking for? More of the specialty items that we do on the seasonal menus. The messaging that we used that focused on the core menu and, frankly, some of our top sellers, our top three or five sellers, is really what resonated with the consumer. That's what we've leveraged going forward. When you ask, how do we know that the consumer is recognizing that? We've got results from tests that we've done on a number of different creative executions. On the egg front, Sarah, our size and our annual egg contract, really, for us, it secures the supply, right? We don't have any outages or shortages of eggs in the restaurants. I don't think in terms of just pricing, we are still paying more, and we have a premium product that we use in terms of eggs. While you go to the grocery store and maybe you're seeing egg outages or just thin shelves and that sort of thing, we don't procure our eggs from the same place that grocers do, principally because of the business that we're in. It's not a place for us to look for value right now. It's very—it's we're paying a premium, and I think everybody else is probably paying a premium too. All right. As you think about competitors who may be surcharged, things like that, your view is that it still may not be the place that you want to emphasize value just because your input costs are so high? I think that's right. Yes. Okay. And then just quickly on the advertising, I guess when you talk about the delivery and the 3P, is that what you were doing better as you think about transaction growth? Is it the marketing piece, or is there something else that you were referring to as you were able to turn that trend around? Yeah. If you remember what we talked about previously, the third-party channel was the biggest drag, was the biggest headwind on our customer accounts and traffic. We also talked about how quickly it turned. We have just worked very closely with our providers on kind of a new arrangement that helps with our visibility, and we have seen the results that we expected from it. Our partners leaned in with us and worked with us. I mean, it is good for them too. Our day part is one that we are a big player in, and it is not as robust, I guess, from a number of restaurants that are in that space. We are important to them. They are important to us, and we work together to put together a true partnership that works for both. Thank you. Our next questions are from the line of Andy Barish with Jefferies. Please proceed with your questions. Hey, good morning, guys. Just wanted to kind of go through restaurant-level margins in 2024 and 2023, for that matter, at the high end of your kind of targeted range. It looks like there'll be some decline this year. I'm kind of guessing anywhere from 25 bps - 75 bps. I guess, is that all in the food cost line? Just in terms of geographically on the P&L, where will the higher marketing costs wind up showing up the most? Yeah. Marketing would be in the G&A line item. If we have margin pressure, Andy, I think what we are trying to dial into is we are focused on growing traffic and growing margin dollars, even if the margin comes under some pressure as a result of the inflation that we are seeing. I really would not want to confirm kind of your percentage range that you expressed there. Again, we are focused on growing those dollars, even if we have to take a little bit of the inflation on the margin. Because if we look and we see that the inflation appears to be transitory, then we are pleased to take some on the margin as long as we are growing our margin dollars. Gotcha. And then just a quick follow-up on the labor efficiencies. I know that worked really well. Are you at a point where there are more productivity improvements, or will it kind of potentially come from just the leverage of getting back to positive comps and positive traffic? Yeah. That's the always work of the heart of restaurant managers. We claimed some low-hanging fruit last year, and the teams worked hard to incorporate some of the new information and to adjust more swiftly in terms of staffing. There are more things that they'll continue to add. I don't know that we can expect the kind of efficiencies to flow through that we saw last year just because the volume of things to focus on is smaller. They are constantly looking for ways to either change the staffing or the choreography of the restaurants so that we can better serve the customers, but also to optimize the labor efficiency as well. Andy, I'd say that the restaurants performed exceptionally well in a down traffic environment. We think we have leverage opportunity if and when we see the improved customer counts. Great. Yeah. Thanks for opening Hanover. I may have to head over there later. You're welcome. We did it for you. Thank you. As a reminder, to allow as many as possible to ask questions, we ask that you please limit yourself to one question per analyst. The next question will come from the line of Jim Salera with Stephens. Please proceed with your question. Hey, Chris. Hey, Mel. Good morning. Thanks for taking our question. Morning. Mel, I wanted to maybe disaggregate, if I can, some of your commentary on the commodities, given that you're factoring in tariffs. Is there a way for you to break out how much of that high single-digit commodity impact is from tariffs? If we were to see those roll off, kind of what you would expect from an improvement? I guess, would that happen, I would think, immediately, or maybe I'm not thinking about that correctly? Jim, we believe that furnishing the inflation as just a combined range is most helpful because that's how we think about it. Management considers it one pool of costs that we manage to. As we go through the year, I mean, we'll be updating where we come out on inflation, and we'll know more about the tariffs when we issue in May. Okay. Maybe shifting gears and thinking about the traffic commentary, if we think about flat to positive traffic for the year, obviously, a lot of people in the industry kind of talking about maybe flat to down traffic, which would imply you guys gaining a little bit of share. Is that the marketing driving new guests to the restaurants and kind of discovering First Watch for the first time? Or is there a frequency component in there as well that's supporting guests that are already familiar with the concept coming on a more frequent basis? I think our expectation of our marketing is, I mean, we're certainly very optimistic about it. I think it drives both frequency and new guests. Okay. Great. I'll hop back in with you. Our next question is from the line of Gregory Francfort with Guggenheim Securities. Please proceed with your question. Hey. Hey. Hey. Thanks for the question. My question is, I think a couple of quarters ago, when traffic was maybe in a little bit softer spot, you talked about pressure on kind of the weekday day part at certain times. Has that changed, and has that been what's maybe helping traffic the last couple of quarters get a little bit better spot? Any change in terms of what you're seeing from a day part perspective? Thanks. I think it's pretty much stayed the same from a mix standpoint. Weekend traffic is still better than weekday, and the day part mix has been about the same. I think it's just, so I think the input flow of the consumer at the different day parts hasn't changed. It's just that we've seen more. Got it. Maybe I'll sneak a second one in here. Chris, for a company of your size, I think you guys are doing more with customer data and analytics than some of your peers. Can you share how you think about that? Do you need customers to be in a loyalty program to be able to use customer data? Can you do it outside of that? Just any perspective on how you do that? Thanks. Yeah. I'll tell you that if I have to answer your question yes or no, the question is no, you don't have to. As long as you have ways in which you can collect consumer data, both your customers, customers of competitors, lapse users, those type of things, it's really about the way you go about speaking to them and reaching out to them, the frequency, the messaging, and those type of things. Our team does an incredible job of cutting up that data and using it. We've been talking about it for a long time, building that data lake. We're at a point now where we can really start to leverage it. The way in which our team goes about it is high level. Thank you. Our next question is from the line of Chris O'Cull with Stifel. Please proceed with your question. Great. Thanks, guys. This is Patrick on for Chris. Good morning. Hey, Patrick. Hey. I wanted to ask about the anticipated mix impact of the marketing investments going forward. Mel, I know you do not typically have an explicit forecast in the guidance for the underlying mix, if I remember correctly, and you can correct me if I am wrong there. Are you assuming any negative mix impacts from those marketing investments you plan to make? Is the underlying mix still positive if you kind of back that out in the current result? I do not think we anticipate—and first of all, I will confirm you are right. We do not typically break out mix in our guidance, but we do not expect a negative mix impact. Okay. Chris, I had a quick follow-up on the marketing investment. Is the plan to distribute the spend equally across the system, or is there any intent to lean into specific markets or regions where you think you could see a disproportionate impact? In the testing that you guys did, was there any major difference in the result of reaching your own customers versus I know you had some efforts where you were looking to reach customers who had not ever used the brand yet, maybe customers of competitors? I was just curious about the relative distribution there as well between targeting your own customers versus targeting customers outside the brand and if there was any learning from the test that influenced how you distribute those investments across those buckets. Thanks, guys. Sure. I'll start with the first part of your question, which is we're obviously focusing on markets where we have the greatest density and penetration for obvious reasons. The more outlets we have for customers to be able to engage with us, the more efficient our spend is going to be. That was a big learning from our test. It's obvious, but we also wanted to test it that way. On the second part of your question, we saw the result that we expected from when we targeted our own customers and when we targeted customers of competitors because it was based on frequency and basically trying to get one more visit out of our customers and also getting in the rotation for customers of competitors in our day parts. Both of those approaches were successful, obviously at different levels, but both of those approaches are also built into our plan for 2025. Great. Thank you. Our next question is from the line of Brian Vaccaro with Raymond James. Please proceed with your questions. Hi. Thanks. Good morning. You guys highlighted the strong performance of some of your new unit openings. Could you just elaborate on some of the common threads driving that outperformance versus your targets? Is there anything worth highlighting in terms of average square footage, new versus existing markets, or any inflections you're seeing in certain markets around brand awareness? Probably on average, the new restaurants that we've opened recently and frankly the last couple of years, probably the square footage has exceeded the legacy fleet. I think if you go back a few years, the legacy restaurants on average were probably under 4,000 sq ft. Most of the projects that we open now are above 4,000 sq ft, 4,500. There is also, Brian, I think you and I have talked about this before, that there is a lot of—it is a lot of second-generation space that we have proven that we can go into and sort of nimbly change restaurants which are in great locations for our customers, but that they—another brand or another type of concept maybe wanted to move out of their lease or relocate or something like that. Some of those are actually quite large, and we will take those spaces. They provide for a much larger dining room and larger kitchens, larger patios, or more prominent appearance in the restaurants. I do think that those are well received when we add them to the fleet. Brian, I'll add that one of the things I'm excited about, and we've talked about it before, is our ability to open across geographies and have similar performance. We know that when our teams stick to the data, the diligence, the site selection criteria, and the evolution that we've seen in our prototype, that we work everywhere. Our ability to enter new markets, like we've done this year in New England and in years past with Chicago and other markets, is very encouraging to us because we can kind of have a diversified geographical footprint of where we open. If you look at—we've talked about there's no two First Watches that look alike. We're constantly iterating and improving our prototype and how they look, for example, the patio features and those type of things. We continue to get smarter and better at this and have been really pleased with the results that I talked about in the opening from our NRO standpoint. All right. That's helpful. Thank you. Maybe just one quick follow-up, if I could, on the guidance. Mel, obviously, a lot of moving pieces with commodity inflation, the advertising investment. Are there any high-level guardrails you could help us with in terms of what your guidance assumes for store margins and G&A spend? Thank you. The guidance that we gave, I think the guardrail I'd refer you to is the Adjusted EBITDA in the range of $124 million-$130 million for the year. Everything that we've considered for the year in terms of inflation, in terms of our marketing spend, in terms of restaurant margins, all of that is baked into those numbers. That is where we have our enthusiastic plan addressed. Thank you. At this time, I'll turn the floor back to Chris Tomasso for closing remarks. Thank you for your thoughtful questions and for participating in our call today. We appreciate it. Once again, I also want to say a special thank you to our entire First Watch team for standing shoulder to shoulder and making days brighter for all of our customers every day. I hope you all have a great day. This will conclude today's conference. Thank you for your participation. You may now disconnect your lines at this time.