Full Stop
I was bored with the restaurants that I knew, so my next comparison was to a stock I knew very little about. First Watch (FWRG - $15) has only been public for a year, so this was my fist look. I had been to their restaurant one time, but did not even know they were a public company.
It was time for lunch, so I found a store only 5 miles away. The more I learned, the more I liked. The concept is breakfast for lunch, with only one shift closing at 2:30. The food is very high quality, and advertising is only 1% of sales. The vibe is more local coffee shop, than chain restaurant. The chain has 500 restaurants today, but hopes to grow to 1500.
***** When you find something you really like, drop everything and dig in.
I consumed every public document and presentation I could find. I ate at First Watch for the next week and asked plenty of questions to the servers and managers. Should you buy a restaurant stock because you like the food and service? That is a very difficult question to answer.
The problem is that because FWRG is growing so fast, its earnings are only about breakeven. Selling at about 1.5x sales the stock is an interesting speculation. For right now I will make FWRG a “special situation” stock, and monitor it carefully. I would not want to own a portfolio filled with stocks like FWRG, but it might have a place in an otherwise conservative portfolio.