BRCB

Good afternoon, welcome to Black Rock Coffee Bar's first quarter 2026 results conference call. Today's call is being recorded, and we have allocated one hour for prepared remarks and Q&A. At this time, I'd like to turn the conference over to Will McIntosh, Chief Investor Relations Officer for Black Rock Coffee Bar. Thank you, sir. You may begin.

Good afternoon, everyone, thanks for joining us for Black Rock Coffee Bar's 1st quarter results. Before we begin, we would like to remind you that this conference call may include forward-looking statements. These statements, which are subject to various risks, uncertainties and assumptions, could cause our actual results to differ materially from these statements. These risks, uncertainties and assumptions are detailed in this afternoon's press release, as well as our filings with the SEC, which can be found on our IR website. We undertake no obligation to revise or update any forward-looking statements or information except as required by law. During our call today, we will also reference certain non-GAAP financial information. We use non-GAAP measures to assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items we do not believe are indicative of our operating performance.

The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Reconciliations of GAAP to non-GAAP measures can be found in this afternoon's press release and in our SEC filings. Joining me on the call today is our CEO, Mark Davis, and our CFO, Rodd Booth. Following our prepared remarks, we'll open the call for your questions. With that, I'll turn the call over to Mark.

Thank you, Will. Good afternoon, everyone. We appreciate you joining us today to discuss our first quarter earnings. We started 2026 with a clear focus on executing against our strategic priorities and building on the core strengths of our business while staying true to our simple mission to build connections through caffeine and community. At the heart of our model is a highly personalized, community-driven experience where every interaction is designed to be memorable, authentic, and rooted in connection, driving loyalty and engagement. Equally important, our culture remains a true competitive advantage. We invest deeply in our people and foster an environment where team members feel empowered, valued, and inspired, which translates directly into exceptional service, strong execution, and industry-leading retention.

Our growth strategy is anchored in company-operated stores, giving us greater control over our guest experience, the ability to protect our culture, and strong unit economics as we scale. Together, these priorities continue to guide our decisions and position Black Rock for long-term value creation. We delivered strong first quarter performance, achieving both revenue and adjusted EBITDA growth of 24% compared to the prior year period, ahead of our long-term growth algorithm. We opened 9 new locations in the quarter, bringing our total stores to 190 as of quarter end. Same-store sales growth was 5.2% or 14.4% on a 2-year basis, demonstrating resilient demand and strong execution even as we lapped a strong prior year comp and fully aligned with our mid-single-digit expectations.

Our focus on our three strategic priorities, deepening customer engagement, strengthening our people-oriented culture, and expanding our market presence underpin our performance and remain central to our long-term growth strategy. These initiatives are further supported by the strength and resiliency of our customer and our model. Our broad and balanced demographic exposure ranges from ages 18-45 and skews slightly higher income. We also see consistency across both day parts and days of the week, which is a key differentiator for Black Rock. Traffic remains steady from the morning through the afternoon, with meaningful opportunity as the day progresses. Sales are also well-balanced across weekdays and weekends without reliance on any single day part. Importantly, approximately 55% of our mix is coffee, a category that has historically proven highly resilient, and we continue to grow our mix in food and energy to drive check across day parts.

As a result, our unique positioning insulates us well amidst an uneven macro environment. With that, let me take a few minutes to walk through our first quarter progress against our strategic priorities. Starting with customer engagement, digital sales grew sequentially as a percent of sales in the first quarter. Reaching approximately 17% of our sales, driven by increased guest frequency across app, online ordering, and third-party delivery. These channels continue to enhance convenience and provide greater optionality for our guests. Touching on loyalty, momentum continued through the first quarter with our loyalty rewards participation rate at 66%, reflecting strong guest engagement from the outset with continued month-over-month growth, even as we open new locations. Loyalty members continue to demonstrate higher visit frequency and greater spend per visit relative to non-members, highlighting the program's impact on driving repeat behavior and strengthening long-term guest relationships.

Our loyalty database is expanding steadily and has become one of our most effective channels for engaging guests and delivering targeted value. In the last two years, we have established a robust data asset that provides deeper insights into our guest preferences, positioning the program to support continued growth and more personalized engagement over time. To that end, in quarter one, we piloted segmented personalized offers across our loyalty base in our Phoenix, Colorado, and Dallas markets with notable results. When we moved from a single blanket offer to segmented incentives tailored by guest type, such as coffee-forward rewards for coffee drinkers and fuel-based offers for energy enthusiasts, we saw meaningfully higher engagement and spend. In one case study, personalized segmentation more than doubled engagement, drove a nearly 100% increase in incremental spend, and generated over three times the incremental visits versus a blanket approach.

Lifecycle-based segmentation outperformed one-size-fits-all offers by delivering significantly higher visit lift and incremental spend efficiency as we meet guests where they are in the Black Rock community. These insights reinforce that personalized value, not just more value, is what drives meaningful behavior change. As we look ahead, we plan to expand this disciplined data-driven segmentation strategy into additional markets using loyalty as a powerful lever to engage with our guests, provide a differentiated experience, and as a reminder for why they choose Black Rock. We're a premium offering customized to meet their needs, delivered by an engaged team for a personalized and authentic experience. Additionally, our programmatic marketing campaign launched in the fourth quarter of 2025 continued into the 1st quarter of 2026, helping maintain same-store sales and guest engagement during a seasonally softer period for Black Rock.

The campaign was designed to extend our reach beyond existing loyalty members while sustaining traffic across our core guest base and results exceeded expectations. From a performance standpoint, we saw the strongest lift in visits from non-customers and our highest frequency visitors demonstrating the campaign's effectiveness in both attracting new guests and deepening engagement with our most valuable cohorts. Building on this momentum, we are launching a follow-on programmatic campaign in the second quarter across Phoenix, Dallas, and Colorado with a continued focus on prospecting in all markets and an added layer of retargeting in Phoenix, where we delivered the strongest cohort-level performance. We anticipate this next programmatic marketing campaign will drive measurable improvements in engagement and visit frequency.

While loyalty remains a valuable lever for influencing repeat behavior, our programmatic campaigns are unlocking stronger growth at the top of the funnel, expanding awareness, reaching new audiences, and bringing first-time guests into the brand. As we scale, loyalty will play a key role in enhancing the guest experience while paid media and programmatic efforts remain focused on attracting and converting new guests. As it relates to menu and innovation, we were very pleased with the performance of our first seasonal window of the year, which delivered strong year-over-year growth and the product mix of our core offerings increasing more than 60% versus last year. From a product standpoint, results showed particularly strong performance from indulgent flavor-forward beverages such as the Pecan Pie Blondie, Prickly Pear Fuel, and Strawberry Blondie, which ranked among our top sellers for the quarter.

The Strawberry Blondie with Sweetheart Cold Foam was especially impactful, performing well as a featured beverage and driving incremental attachment as guests added the Sweetheart Cold Foam across a wide range of drinks. This customization behavior was all highly social, with guests sharing these visually compelling beverages online, reinforcing the importance of creating shareable menu items. Overall, the first quarter reinforced that our LTO strategy, combining bold flavor innovation with seasonal and social relevance, is resonating strongly with guests and driving both engagement and incremental traffic. Furthermore, we're continuing to evolve how we amplify these launches through our influencer strategy. We're encouraged by the early traction we're seeing from this newer component of our marketing mix, particularly on discovery-driven platforms like TikTok, where authentic storytelling resonates strongly with new audiences. Most importantly, we're learning quickly.

Our recent Desert Springs campaign is already delivering stronger engagement and deeper audience interaction, reinforcing that our content approach and creator mix are becoming more effective. We're also seeing meaningful benefits from a regionalized strategy that partners with creators in specific markets, allowing us to show more authentically at the local level while driving increased brand visibility and organic social momentum. Starting in the second quarter, influencer partnerships will align with our key summer seasonal windows, presenting an exciting opportunity to enhance our reach. Overall, we view micro-influencers as a powerful storytelling channel that brings the brand to life through real voices. We will continue to build and scale this program thoughtfully over time. As it relates to our food offerings, Egg Bites continue to exceed expectations with our guests, driving attachment and check growth over prior year as anticipated.

In the second half, we plan to introduce new and innovative food options to continue driving engagement and growth across day parts as we lap the launch of Egg Bites from the prior year. Product mix for fuel and food increased again sequentially in the first quarter, showcasing the sustained demand and engagement for our menu innovation and elevated sweet and savory food items. On the innovation front, we were excited to launch a protein test in Phoenix in early March, introducing a protein-boosted milk for dairy-based drinks, protein boost for shakes and smoothies, and protein cold foam as customizable add-ons across our beverage platform. We've been encouraged by the early results, which have driven incremental attachment and ticket lift, particularly with cold foam, where protein is creating differentiated entry point with fuel by enabling customers to add protein to energy beverages.

This is a capability that remains unique in the category. Importantly, protein is also performing well in core beverages like lattes and signature drinks, reinforcing that this is a natural extension of our existing menu. Guest response has been very positive, with strong satisfaction scores and clear feedback around the value of adding protein without sacrificing flavor or experience. Based on this performance, we expanded the test into additional markets with a full system rollout completed in April. As we scale, we'll continue to refine positioning and menu integration, but we view protein as a longer-term platform opportunity that aligns well with evolving guest preferences and our broader innovation pipeline. Regarding other recent innovation, our seasonal Dirty Soda partnership with Olipop was an important test and learn opportunity, providing valuable data, insights, and guest engagement that we will leverage in future offerings. From a guest perspective, response has been encouraging.

Customers who have tried the beverage are rating it highly, with feedback showing strong alignment with both the flavor profile and the broader Dirty Soda trend. We're also seeing incremental strength in the afternoon day part, which is a future targeted area of opportunity for us as we work to drive traffic outside of morning peaks. As our near-term focus remains on scaling the recently launched protein platform, we are using this period to gain insights and refine the Olipop offering. Looking ahead, we have an Olipop recipe refresh planned for the second quarter, along with barista-driven variations, which we believe will help broaden appeal, encourage repeat trial, and inform future innovation decisions. Overall, our broad menu innovation and multiple points of guest interaction continue to support strong customer engagement while creating meaningful opportunities to deepen brand relevance and expand our presence across markets.

Moving to our people-oriented culture, our continued focus on investing in our people and cultivating a high-performance collaborative culture is driving deeper guest relationships and strong team engagement. Retention remains a key differentiator for Black Rock and underscores the strength of our operating model. One that is rooted in professional development, increased business acumen, and disciplined execution across the organization. Notably, team member turnover hit an all-time low in the first quarter, ending at approximately 54%, continuing to outperform the industry average and improving year-over-year, driven by the evolution of our learning management system. Stronger onboarding and training have led to higher retention and more confident new hires. Store lead turnover also continues to stay below industry average as we continue building the business acumen and leadership skills of our retail leaders through our career roadmap training program, helping them run their stores more effectively.

Our robust programs in place give us confidence in the ever-growing pipeline of leaders as Black Rock who are well-equipped to support our store opening plan and deliver exceptional guest satisfaction. Importantly, the progress we're seeing in succession planning and internal advancement gives us added conviction that we can scale new store growth with our strongest leaders stepping up to drive execution and foster our people-oriented culture across our newest markets. Finally, I wanna take a moment to welcome Jon Vingo to the Black Rock team as our new chief development officer. I've been fortunate enough to work with Jon during my time at both Panera and Tokyo Joe's, and I've seen firsthand his ability to thoughtfully lead complex, large-scale growth initiatives.

He brings deep experience in guiding disciplined national store expansion across multiple brands and markets, and we're confident his leadership will be instrumental as we continue to execute our development strategy and scale the brand. I also wanna thank Robert Kaufmann for his many contributions to Black Rock and wish him all the best in his future endeavors. Last, I'll touch on progress across our expansion strategy in the first quarter. We opened nine new stores across Colorado, Texas, Arizona, and Oregon in the quarter, bringing our total store count to 190. Four of our new store openings in the quarter were in Colorado, a leading growth market for us with terrific momentum. We also continue to build out our more established markets like Portland and Phoenix, which are driving strong early performance despite higher penetration in these areas.

As we grow store density in these maturing markets and add new locations around existing high-volume stores, we are thoughtfully rebalancing demand across our store base to enhance the experience, grow our presence, strengthen our market position, and better serve our guests. This dynamic can result in some sales transfer, where a portion of volume from existing stores shifts to newer locations that have opened in closer proximity. In the first quarter, we saw this dynamic in Phoenix, creating a 160 basis point headwind to same-store sales. To be clear, this is a function of the strong underlying demand we are seeing in this market. New stores are performing well, traffic remains strong, and overall market level sales are growing.

As we grow store density and brand awareness in our key markets, we are continuing to see strong demand at the market level, reinforcing our data-driven concentric circle development strategy. Although sales transfer modestly impacted same-store sales in the quarter, we're encouraged by the long-term benefits and believe it reinforces our commitment to showing up for our guests in key markets while strengthening demand and engagement as these markets mature. Importantly, 5 of our new unit openings in the first quarter occurred in the last week of the quarter, impacting store weeks during the period as expected. Underlying demand remained healthy, highlighted by our strong comp momentum and the continued growth from our newest stores. We expect to comfortably hit our commitment of a minimum of 10 stores in Q2 and 36 for the 2026 year.

As a reminder, on average, new stores will achieve $1.1 million AUVs by 18 months, with incremental growth compounding thereafter. Our development pipeline has continued to mature, and the learnings from this process have allowed us to refine our systems, strengthen cross-functional coordination, and position ourselves for a more robust 2026 opening cadence, which ensures we capture the full benefit of store weeks through the remainder of the year. Across our newest cohort, we are pleased with the year-to-date performance, which is in line with our targets. We continue to see significant opportunity to drive performance and awareness across all markets as we continue to scale and grow our company, including our trajectory to drive AUV growth from $1.3 million system-wide today.

Additionally, as it relates to new development, we maintain significant flexibility on build type, allowing us to pursue multiple development paths to secure the right real estate for our stores with comparable capital deployment. We continue to expect a shift towards more reverse build-to-suit leases in our near-term pipeline, allowing us to more closely manage our development planning and drive greater speed to market. As we continue to build on our dual format foundation, Black Rock Coffee Bar stands apart by pairing drive-thru access with thoughtfully designed lobbies that enable both speed and connection, supported by a differentiated menu with growing food mix that performs across day parts. This combination allows us to serve a broader demographic, meeting guests where they are with convenience and a community-driven experience that extends well beyond coffee.

With a robust development pipeline, a disciplined and repeatable process, and incremental investments supported by strong sales and earnings performance, we remain confident in our long-term growth plan to open 1,000 units by 2035. As we move through the rest of the year, we're energized by the significant white space across our existing markets and the depth of talent across our team, positioning us well to continue executing against our long-term growth plans. While we are confident in our ability to double our footprint within our existing markets, we have also started evaluating new markets with potential new market entries in 2027 and 2028. I'm incredibly optimistic about the path in front of us and bringing Black Rock to more guests across the country.

Before turning it over to Rodd, I want to thank the entire Black Rock team, our baristas, field operators and home office for their dedication and passion in serving our guests. I'm also grateful to our loyal guests for welcoming Black Rock into their daily routines and to our shareholders for their continued support as we pursue meaningful growth and long-term value creation. I'll now turn the call over to Rodd to provide more detail on our first quarter 2026 financial performance.

Thank you, Mark. Good afternoon, everyone. We entered 2026 with strong momentum, and in the first quarter, we generated $55.5 million in total revenue, an increase of 23.7% year-over-year. Our performance was driven by 5.2% same-store sales growth despite lapping a strong 9.2% in the same period prior year. We opened 9 new stores in the quarter, bringing our total store count to 190 and counting. We delivered against our mid-single-digit same-store sales guide despite challenging weather in January, a 60 basis point impact, and the initial impact of strategic densification in Phoenix as we added new stores around existing high-volume locations, which resulted in a 160 basis point headwind, as Mark mentioned earlier.

This reflects a deliberate effort to better serve demand, continue investing where demand is strong, maintain our exceptional guest experience, and drive incremental market level sales. This is a beneficial outcome of densifying high-demand markets as well as an important driver of long-term growth. As we move through the remainder of 2026, we continue to feel good about our mid-single digit pacing and the initiatives we have in place to drive guest engagement. Same-store transactions declined 0.6%, while pricing contributed 3% and check grew 2.8%. Softer transaction volume in the quarter stemmed from a challenging comp as the prior year period saw elevated transaction growth related to the early accelerated growth of our loyalty program, which launched in June 2024.

As Mark elaborated on earlier, we have several initiatives in place geared towards driving awareness and engaging with our guests, including, one, scaling programmatic marketing campaigns and making additional investments to drive awareness and guest engagement. two, increasing investments in influencer marketing, merchandise activations, and paid media. three, expanding loyalty segmentation and day part-based offers to drive frequency. four, continuing to enhance our menu and attachment opportunities through innovation. On pricing, we took price late in the fourth quarter 2025 across most of our markets, which we expect to carry through 2026. We don't plan to take additional price through the remainder of the year in those markets, consistent with our historical cadence of measured price increases.

Store level profit was $16.4 million in the first quarter, up 29.2% year-over-year, and store level profit margin was 29.6%, 126 basis points favorable year-over-year, highlighting the terrific execution of our teams and their commitment to driving great results. Consolidated adjusted EBITDA for the quarter was $7.4 million, up 23.5% over the prior year as we continue to execute against our strategic initiatives. Beverage, food, and packaging costs were $15 million, or 27.1% of total revenue and 122 basis points favorable year-over-year.

Our margin on food, beverage, and packaging costs improved year-over-year, driven by strong execution from our retail teams, executing against our strategic initiatives like inventory management, along with disciplined procurement and pricing management by our supply chain team. As a result of these efforts, we remain confident in the stability of our COGS margin as we continue through the year. Store level labor costs were $11.5 million or 20.7% of total revenue and 32 basis points favorable year-over-year, highlighting our team's excellent work driving operating efficiencies and delivering amazing results. Occupancy and related expenses were $4.7 million or 8.5% of total revenue, up 16 basis points year-over-year. Other store operating expenses were $7.8 million or 14% of total revenue, up 12 basis points year-over-year.

Pre-opening costs were $1.1 million or 2% of total revenue, driven by nine new store openings in the quarter. Adjusted SG&A was $7.9 million in the quarter or 14.3% of total revenue compared to $6 million in the prior year period. We continue to manage SG&A growth closely to support the long-term growth of our business. Our approach remains intentional and disciplined, with investments focused on expanding our team to support our key strategic initiatives, sales growth, and new store expansion. As a reminder, we expect SG&A to be evenly weighted on a quarterly basis through the remainder of 2026.

Turning to the balance sheet, as of 31st March 2026, we had cash and cash equivalents of $20 million and a total debt position of $27.4 million, consisting of $18.7 million outstanding under our credit facility and $8.7 million of financing obligations related to certain reverse build-to-suit arrangements, resulting in a net debt position of $7.4 million and full access to our unfunded revolver of $25 million. As it relates to CapEx, investments were primarily directed towards new unit development, supporting our 2026 and early 2027 pipeline. As Mark mentioned, while we maintain flexibility in our development approach, we expect a near-term shift towards more reverse build-to-suit projects, enabling greater control over development planning and new store delivery.

While these projects typically require higher upfront capital, we expect to benefit from TI contributions in 2026 and into 2027. As such, 2026 will be an investment year as we take advantage of real estate opportunities and support our growth targets. Turning to our outlook, we see a long runway ahead and are excited about the opportunities in front of us, even as we navigate a more dynamic macro environment and lap stronger prior year comparisons. While still early in our journey as a new public company, our progress to date reinforces our conviction in the durability and scalability of our model. Our 2026 outlook remains consistent with our long-term algorithm, reflecting both underlying momentum in the business and investments to support sustainable long-term value creation.

We are reaffirming our full year 2026 guide of 36 new store openings, total revenue of $255 million-$257 million, same-store sales growth in the mid-single digits, consolidated adjusted EBITDA of $33.5 million-$34.5 million. Capital expenditures of $40 million-$41 million, inclusive of anticipated tenant improvement allowances, or $58 million-$61 million, excluding tenant improvement allowances of $18 million-$20 million. Our capital spending supports our 2026 new store class, continued investments across our existing store base, and select investments towards our 2027 class. Our team continues to execute against our strategic initiatives with discipline, driving strong performance across the organization and the markets we serve. We believe our differentiated guest experience, premium product offering, engaged teams, and scalable expansion model positions us well to sustain this trajectory.

Looking further ahead, we remain firmly committed to our long-term target of 20% annual unit growth, revenue growth of 20% or more, mid-single digit same-store sales growth, and adjusted EBITDA growth that outpaces revenue. On this trajectory, we remain confident in our ability to reach 1,000 units by 2035. With that, I'll turn it over to the operator to open the line for questions.

Thank you, team. We will now be conducting a question-and-answer session. If you would like to ask a question, please Press Star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you'd like to remove a question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit yourself to one question and one follow-up. Thank you. One moment, please, while we poll for questions. The first question comes from the line of David Tarantino with Baird. Please proceed with your question.

Hi, good afternoon. I wanted to ask about the strategic densification strategy. Could you elaborate on why you're taking that approach? Secondly, I'm wondering if the sales impact on the comp-based units surprised you at all, or if it turned out the way you expected it to turn out.

David, first off, thanks for joining us. It's good to hear your voice. Regarding the densification of the markets, I think as we densify markets, there's probably some level of sales transfer, especially in, call it, Phoenix. When you're looking at the market level and you're thinking about the strong incremental sales and the attractive returns, Phoenix was a little bit easier for us because we've got such high volume stores. I think it's our highest performing market and most mature, and it was intentional. We're talking roughly five to six stores, and what it did is it gave us great opportunities with high AUV stores that we opened up, and it also made the stores that were higher in AUV run a little bit better.

I'll have Rod, who's sitting across from me here, he can answer a little bit of the math behind it, but it's pretty immaterial when you look at what we received with the AUV from the new stores.

Yeah, David, I think, you know, as we talked or as Mark mentioned, what I would add is, you know, in terms of sales transfer, about 160 basis points, about 130 of transaction. You know, really when you look at Phoenix as a whole, as Mark mentioned, it is one of our higher volume markets, our most penetrated market, and really more than anything, it's just, you know, we had really good opportunities. They were within five miles of some existing stores. We haven't really seen that historically. Historically, when we have only a few instances, those stores really build back in the next 12-24 months. It's really a way to continue to grow within Phoenix. We like the sites very much.

Even looking ahead, giving you a little bit more, we've got another 10-12 stores in Phoenix this year, and there's only about 3-4, depending on when we open them this year, that are within that five mile range. We don't see the impact being really significant. For us at the moment, really, Phoenix is the one market where we're seeing that. I think the white space in all the other markets that we're in don't really give us any concern for a number of years.

Got it. If I could ask a follow-up, I guess, was this the first quarter you saw an impact or just the first quarter that it was measurable enough to call out? Then I guess the follow-up to that is this 160 basis points or so, something that we should expect to see for the rest of the year until you cycle all of this? I guess maybe just give us some context on how, you know, how this all will play out.

The first quarter was the first quarter where we saw really some movement and the transfer of the sales. These are stores that we opened at the end of 2025 or in the second half of 2025. I think as we think about the 160 basis points, you know, it's really early. We're going to continue to manage it and watch it and we'll continue to report out on it. I think more than anything, you know, sometimes the stores, what we found is they'll take that initial hit and then they're building back guests as they continue to grow and the new store continues to grow. It's really, really early for us. Like I said, I know we've shared in the past, we really haven't experienced much, if any, sales transfer.

Obviously, Phoenix is our most penetrated high volume market and we're gonna continue to watch it. It's also helping from a development strategy to understand what's that right, you know, balance proximity for stores. You know, 3-5 miles is how we've been approaching it. By the way, not every store within five miles has had this, you know, transfer of sales, but it's new and it's something that we're continuing to manage and monitor.

Great. Thank you.

Thank you, David.

The next question comes from the line of Brian Harbour with Morgan Stanley. Please proceed with your question.

Yeah. Hey, hey, guys. Do you care to comment on just the start of the second quarter? Are you still, you know, sort of in that mid-single digit range that you're thinking for the year? Any change there?

Brian, we again, and we talked about this a little bit earlier. First quarter, we came in at 5.2, we were lapping the 9.2, and we have continued to reiterate that we have no issue reaffirming our guidance. I think secondarily, when you look at our long-term algorithm of the 20% system-wide sales, the 20% EBITDA growth and the 20% unit growth, we came in at 24% on the sales. We came in at 24% on the profit, and we're at 23 on the unit growth. Again, as I had said earlier, everyone in the company is very strong in what we guided to, and we will continue to come through on that commitment.

Okay, thanks. Just, you know, you called out, you know, I think in particular some of the segmented offers that, you know, drove higher spend, then you also kind of talked about the new marketing campaign. I guess, you know, how broad were those done and how much of a contributor was that to, you know, the first quarter performance? I mean, obviously, you're kind of highlighting the headwind perhaps from sales transfer, but, you know, how do you think about sort of the potential tailwind from those other things that you could expand this year?

I appreciate it, Brian. I think for I'll give you a couple answers here. I think on the marketing side, the marketing spend, we have increased our marketing spend by 30% versus prior year. As you think about that, Brian, what that means is we're gonna be about 2% of our sales being marketing. Long term, we see a meaningful opportunity to scale the marketing investment. I think, Brian, as you think about paid media, you know, Rodd Booth brought up the influencers, the merchandise drops, all of those are driving brand and awareness, which we all know as a new smaller company we really need. We feel like that's a great strategy. We're certainly driving the innovation, which we'll talk about more undoubtedly.

You know, on the loyalty, the segmentation, it obviously drives rewards, which is great on the value side, we like that very much. Then we're pushing on the food attachment. With regards to loyalty and the segmented targeted offers, in quarter one, we tested segmented offers in selected markets. What that basically means is that coffee-based guests got coffee-based offers, fuel-based offers went to fuel-based guests, then there's some life cycle-based incentives which we're trying to use to drive frequency. Here's a little bit of the math that you're asking about. It doubled the engagement, when you look at the initial test that we ran, we nearly doubled the spend. We also drove three times the incremental visits.

There is a plan to expand that segmentation and continue to grow the same-store sales, and we'll do that through more personalized value offers. Just to make sure we follow up on the paid media, we like the paid media 'cause it drives the awareness. That's important to us. We've been really encouraged by the early results. We're gonna continue to invest with the new guests, 'cause I think as you look at us, we are currently at about, let's call it 66% of our traffic is loyalty guests. Loyalty guests spend about $1 more on check than non-loyalty. As you think about that, while we're so very strong on loyalty, we wanna make sure that we're bringing new guests in. We'll continue with that paid media to build brand awareness.

We're certainly trying to strengthen the marketing at the top of the funnel. I think when you look at that paid media, what we're most happy about is that gives us a chance to introduce Black Rock to people that have never been before. Sound good, Brian?

Yes, thank you.

Thank you. The next question comes from the line of Sharon Zackfia with William Blair. Please proceed with your question.

Hi. Thanks for taking the question. You know, obviously, the margin performance at the unit level has been, you know, jaw-droppingly good. I think if you kind of back into full year guidance, just given the EBITDA margin guidance, it probably implies flattish full year margins, which again, is still a good level. I'm curious what the pushes and pulls would be for the rest of the year versus the great leverage you saw in the first quarter.

Yeah. Thanks for the question, Sharon. You know, when we look at margins in the first quarter, you know, the 29.6%, really happy with the team, and I know we've spoken about it in the past. You know, every year we go into the year with strategic initiatives for the team that help with the execution. Last year, big one was inventory management. That has certainly contributed and helped When you think about the supply chain team, our procurement team, them working closely with our partners to really help manage costs and make sure we've got a really stable and predictable supply chain, they're doing a tremendous job there. From a margin standpoint as well in the first quarter, you know, Mark mentioned it, we're lapping a lot of accelerated growth within the loyalty program. In the first quarter of 2025, we did have more discounting, more start of the year offers, welcome offers for our guests as that program was building. There's a little bit of margin in there in the first quarter of this year because the discounts were lower than they were a year ago. Generally speaking, you know, where we ended last year, 29.2%, first quarter, 29.6%, we feel really, really good about the margin.

I think for the year, you know, we expect to continue the momentum. You know, 29.6%, as you suggested, you know, is a good margin, and we're really proud of the team for their ability to execute and drive performance.

Can I ask a follow-up on mix? It looked like that gapped up kinda nicely for you sequentially. I know year-over-year you're talking about the discounts, but is that just a function of lapping those discounts, or is that also reflecting some of that loyalty work that you did in the quarter with segmentation?

Sharon, just to kind of reiterate on the mix, coffee's gonna be about 55%. Energy has grown up to 25%, so we're really proud of that. Food is elevating. We're now at about 13%. Again, digital in totality, and again, this goes to your loyalty and everything with that, we are at 17% of sales through the app, online ordering, and third party. Again, we expect that to ramp. We're certainly increasing and enhancing the functionality, and the loyalty integration and the targeted offers certainly helps. I think while digital is growing, we're very cognizant that we want it to be a complementary channel. While it enhances convenience and frequency, as you're aware, we're really proud of our engagement and the terrific baristas we have and how they interact with the guests.

What we want is an easy, personal, and meaningful message that we can give to everybody that engages. Ideally, we would like that digital to be complementary.

Hey, Mark. Sorry. I meant the 2.8% of mix in the check, which I think is up from, like, 1% in the back half of last year.

I follow. Yes, that's both the incremental growth of food, which is an attachment item for us, and then obviously, yes, discounts coming down as well, which helps with the check.

Thank you.

Again, Sharon, as I commented, that food mix is elevating, and part of that is Jess and the team have done a really great job with some new breakfast items, and we've certainly pushed on that, and I think that's helped in a big way.

Okay, thank you.

Thank you. The next question comes from the line of Andy Barish with Jefferies. Please proceed with your question.

Yeah. Hey, guys. Just wondering if the Olipop Dirty Soda LTO didn't kind of pop, so to speak, as you guys may have thought, and what, you know, what the learnings were around that, if you could?

Yeah. I think, Andy, when you look at Olipop, and I'll go back to our Italian soda and everything that way, that's gonna be in that 3%-4% of mix. I think when you look at Olipop, it is fantastic from an awareness. I think it helps with being partnered with a great brand, and it certainly has provided valuable insights. I think when you look at it gives us a great way to talk to other guests, and it's a new, innovative way to talk about the brand. I think as you look at our coffee mix, you look at our energy mix, again, Olipop is gonna be on the smaller side. I would say generally, the protein has been a strong addition, and in the near term, we'd love to scale that protein.

Again, I'll use an example that we're able to put the protein cold foam on top of energy, and our peer group typically doesn't do that. That has been a real positive for us as well.

Okay. Then a follow-up just, you know, in terms of kind of the recent, you know, quarter to date and all the noise out there with, you know, gasoline prices and such, you know, Starbucks putting up a good quarter and McDonald's launching some beverages. Anything you'd call out, any changes in consumer behavior you're seeing, or was really the, you know, the sales transfer in the first quarter kind of the primary reason there was an upside, you know, kind of to the mid-single-digit comps?

Well, Andy Barish, I think starting with the mid-single-digit comp, you know, one of the things that we have tried to reiterate through this call and will continue to do through the Q&A. We're running right in the neighborhood of 7-7.5 on a two-year basis, which, again, is really, really strong. You know, I think when you look at the consumer, as you're aware, we've got a balanced demographic where we're going to be 18 to 45. Again, with that coffee at 55%, it certainly leans higher income. We have not seen slowing of momentum whatsoever. You know, I think I'd go a step further that Jess Williams and the team have worked real hard to push, you know, the Black Rock value proposition.

You know, we're trying to drive a higher quality item at a competitive price, and we drive that through an exceptional guest experience. As you look at the satisfaction that Clay and the team have run, we have never been higher. That's fantastic. I think what we believe is that, again, if we deliver on what we're supposed to operationally, we're in a really, really good place.

Thanks, guys.

Thank you, Andy.

The next question comes from the line of John Ivankoe with JP Morgan. Please proceed with your question.

Hi, thank you. You know, there were comments made on some of the higher volume stores on Phoenix, and I think implicitly, you know, just overall, being pleased with Portland. I wanted to get a sense of some of your other markets. You know, first, I'm gonna call them opportunity markets where you're not growing much, that have lower average volumes in a Dallas, a Houston, and a San Antonio. That's kind of the first bucket I'd like to talk about, cohort I'd like to talk about. Then secondly, some higher volume markets like Denver and Austin, where you are growing. I wanted to get a sense of how the new unit volumes have been in the Denver and Austin units specifically, as I do think they're making up a pretty decent part of the 2026 class.

Thank you.

Thanks for being on, John. I'll start with Texas. We opened two units in Texas in the first quarter. We are certainly feeling very, very strong on those. They've come out great. When you look at the densification opportunity, we see that we can progress on that, and I think what you're gonna see through regionalized marketing and innovation, that's gonna help quite a bit. With regard to Texas, Austin continues to be the strongest market. The openings have done really, really well. Pflugerville, which is one of our newest openings, has done just outstanding. We had a chance to take the leadership team down there and spend time in Austin, and it was really a tremendous experience. Team doing really, really well.

I think as you think about Texas, the concentric circles and our ability to open stores near the stores we're in has shown to be really positive, and we're continuing to try to be predictable and make sure we're doing this in a cautious way, but it's starting to go really, really well for us. I think when you speak to Colorado, and we're really proud of Colorado. Colorado at the moment, especially with the McDonald's test there, and I know that's come up in the past, we have not felt any impact from the McDonald's test. Energy continues to grow. McKenzie and the team in Colorado, on a two year basis on their comp of 17.3% or they're averaging 87. It's an incredibly strong market with strong AUVs.

Just to follow up a little more on that competition, which I know has come up through other earnings calls, I'll give you three different units. On a mature basis, Castle Rock, which again is in Colorado, is doing $40K a week. It is gonna be right by a Dutch Bros, right by a Starbucks, and right by a McDonald's, and it's up 15% with a 7.4 same store transaction. I'll then go to last year's class, Power and Elliott, which is in Arizona, is again right by our peer groups. I mentioned the three earlier, and it's doing $35 a week and growing. We love that not only are we seeing success in mature, but we're seeing it in last year's cohort. John, here's the one we're most proud of.

Jess Williams, who runs the Pacific Northwest, that market is among our highest comp this year, again with the most competition. We opened Cedar Hills, which is dead in the middle of Oregon with all that competition around it, and that new store has opened up at $26 a week. We feel that we've got that winning model with not only the drive-through, but we've got the great lobbies with the engagement. We've got the online ordering and the third party, and so feel really, really strong about that. Does that answer your question?

Yes, all that color is helpful, Mark. You know, thank you. Listen, I don't expect to talk, you know, city to city forever, but I know there's a lot of different kind of micro stories within the business, so thank you for that color. Let me ask, you know, of course, I, it's tough to do this on the fly, but I just wanted to make sure that I heard something right, maybe it'll benefit some others as well. There was a comment made, and I think it was two year traffic of 7%-7.5% in the 2nd quarter. Just clarify what that 7% to 7.5% was and, you know, just maybe simplify the math to me.

Does that imply that we're running in line with mid-single digit comps for the year for the second quarter or maybe a little bit below mid-single digit comps for the second quarter? I just wanna make sure that I'm not going to mischaracterize anything, so I just wanna give you the opportunity to clarify it for me and perhaps some others. Thank you.

Thank you, John. Colorado, on a two-year basis, just the state of Colorado, has a comp of 17.3, or they are averaging 8.7.

No, hey, sorry, Mark. That was in reference to a previous question, not just what you said on Colorado. I didn't mean to interrupt you. I just, maybe I misheard the number on 7-7.5 in a previous question, but we can follow up on that if I'm taking a number out of context.

I think, John, what we said is we were up against 9.2 in the first quarter of last year. We ran 5.2 in the first quarter of this year. I think what we said was that there was 1.5% of sales transfer and there was 0.6% of negative sales transactions from some of the lap of the loyalty program, et cetera. What we have said regarding the second quarter is that we feel very good about our guidance, and we are reaffirming that we will be mid-single-digit.

All right. That's all I needed to know. Thank you so much for that.

I appreciate you being on, John.

The next question comes from the line of Chris O'Cull with Stifel. Please proceed with your question.

Thanks, guys. Not to beat a dead horse here, but can you just clarify whether you expect transactions to be positive in the second quarter?

Yeah, thanks for the question, Chris. You know, like I mentioned, previously, about 130 basis points of transaction decline from the sales transfer primarily in Phoenix. You know, I think that was, you know, something that we didn't originally anticipate, but I think, you know, really to Andy's point, that was what, you know, kept us from the upside of the mid-single digits on comp. I think as we continue to move forward, we're gonna continue to monitor it and we'll report out. I think at the moment, mid-single digits for the year, kind of as we've guided, we feel really good about.

I think, you know, as those newer stores transfer from the old stores continue to build back and grow, you know, we still see great opportunity with all that, and returns are incredibly strong because they're coming from our highest performing market.

Okay. My other question, Mark, was just regarding the investment in the segmented loyalty offers. I'm just curious, what gives you confidence that you're driving incrementality with those offers versus just pulling forward demand, let's say, over a year?

Yeah. I think when we look at our loyalty, Chris, what we're seeing is that obviously that 66% of our transactions has again grown and we're very, very proud of that. I think when you're looking at what I had said is we've seen on the initial test doubled in engagement. We've seen nearly double the spend, which was surprising to us, but great. Then we've seen about 3x the incremental visits. Again, these are in initial tests. We did this in Colorado and Phoenix, and we feel good about it. I think, Chris, what I'd like to make sure is that Jess and the team have more time to make sure that that trend continues.

I think as far as the math goes, we each and every time we have an investment, and part of this is being small and nimble, we are very, very clear on what is the return on investment and are we seeing incrementality. We have seen that initially, and we expect that to continue.

Okay, great. Thanks, guys.

Thanks for being on, Chris.

The next question comes from the line of Brian Vaccaro with Raymond James. Please proceed with your question.

Hi. Thanks, and good evening. Just following up on the segmented offers. You talked about testing those in certain markets here in the first quarter. Is there any way to frame sort of the pace of the rollout the rest of the year, kind of high level of percentage of units that could benefit maybe in the next two months, and how that benefit could build through the year, how that coverage could kind of build?

Brian, thank you for being on. I think when you look at the segmented offers, you know, we originally tested them in Phoenix. I think, one, back to David Tarantino's question around the fact that we had some sales transfer. We wanted to see if we could push people in and we've been able to do that. We like that very much. We again tried it in Colorado. Colorado, you know, I want to say two years ago was right around five stores, and we are now sitting at 12, and we've got a lot of openings coming second part of this year. Once again, we were able to look at that and go, "Hey, we're going to use this and see if we can push more frequency, et cetera, in." That's worked out really, really well.

I think as you look at the remainder of the year, Brian, we are trying to pace this in a way where we can be predictable and consistent. One of the things that, you know, we have found, and when you look at some of the, you know, double spend, triple incremental visits, doubled engagement, it's really important to us that everybody gets that great experience. We're trying to make sure that while driving people in, that there's a great consistent operational experience. I brought up earlier, we've never had a better mystery shop. Again, Clay Geyer, who you've met, and the operators have done just fantastic for us. What I believe is you will see more of that as we move forward. Again, Mr. Ivankoe, you'll smile when you hear this. We are spending more marketing dollars.

Brian, when you think about that, all of that should push to better sales, better AUV, and again, with the great profitability that we leverage, we should be in a great spot.

All right, that's helpful. Thank you. If I could just squeeze one in on the COGS line. Obviously, another solid quarter of leverage, the ratio in the low 27s. Could you just walk us through sort of your commodity inflation outlook and coffee costs specifically and just where you see that ratio? Did I hear correctly in this 27, maybe low 27s band going forward through the year? If you could just walk through some of the finer points there, Rodd, that'd be helpful. Thanks again.

Yeah. No, no problem. Thanks, Brian. I think we've shared in the past, when you look at our actual cost of coffee, it's just under 3% of our sales. It's about 10.5% of our COGS mix. You know, when we look ahead, I mentioned this last quarter, you know, we see some opportunity, commodity costs coming down. There'll be some benefit, but at less than 3% of our sales, you know, you'll see maybe 30-50 basis points of opportunity. I think when you look at the rest of, you know, our COGS mix and any commodity pressure, I think our team has done a really good job, like I mentioned, working with our partners.

When you look at dairy, when you look at the sugars, we feel really good about where they're at today, and we don't have any immediate indications that any of that is gonna change meaningfully. I think our team has done a tremendous job, you know, with costs essentially staying very stable for us, them going out, really leveraging the tools, the inventory management things we're giving them to drive the expansion, which has helped in a big, big way.

Thank you.

Thanks for being on, Brian.

Thank you. Our final question comes from the line of Matt Curtis with D.A. Davidson. Please proceed with your question.

Hi, good evening. Thanks for squeezing me in. It's just I have a question on development. I think you mentioned potential new market entries in 2027. I was just wondering what new markets you're looking at. I guess equally important, why move up the timeline? I believe you previously planned no new markets before 2028, if I'm not mistaken.

Yeah. Matt Curtis, first off, I believe you're new to following, so I wanted to say thank you for that. Secondarily, you know, when you look at the openings from this first quarter, we opened two in Arizona, two in Texas, we had four in Colorado, and then one in Oregon, which did really, really well. As we've committed to, we will, at a 20% growth rate, eclipse 1,000 units by 2035. When you think about that, we're in seven states, and within those seven states, we have been able to show that we can grow and not need to add a state. Now, I would say to you that we wanna be, and Mr. Tarantino asked this question earlier, we wanna be careful that we're not opening a bunch of stores that cannibalize other stores.

We're trying to be incredibly, I guess the term would be predictable in the way that we do that. When we look at other new states, we're looking at states where obviously there's a coffee culture. I think when you look at the new states, you're looking at similar analogs around the customer base and things like that, then obviously competition, income levels, education, all the above. I think more than anything, we're just trying to make sure that we stay ahead of our commitments. You know, Matt, you being new to us, we had been taught early and often you better do what you say you're going to do. It's real important to us that we hit that system-wide sales of 20%.

We wanna make sure we hit the profitability, but we also wanna make sure that we grow in a way that's purposeful and predictable. Especially with people being such a big part of our culture, it's better to have that spread out. I'll go quickly to California. You know, one of the things that didn't come up today, we have an incredibly strong pipeline that Will McIntosh has done a great job helping us with. I'll go a step further that we have Evie, we have Lauren, and we have Grayson who are going to be leaving existing markets. They are among the very best that we have, and they're gonna go out to California to help us grow that. You'll see substantial growth here over the next, call it three to four quarters.

We're really proud of the fact that we have that pipeline, but we're really fortunate to have Evie, Lauren, and Grayson help us out in that way.

Okay. Understood. I guess I was thinking more in the context of ongoing AUV improvement as you continue to close the gap versus your peers. I was wondering, on AUVs, which have continued to grow, obviously, I mean, which levers, whether it be loyalty segmentation, food, marketing, are expected to contribute the most to the improvement going forward if you think about the AUV trajectory over, say, the next two years?

Well, Matt, you being new to us, I would tell you where we have awareness, I'll use Phoenix, we do incredibly well on AUV, and we have AUVs that rival anybody in the peer group and are better. We do incredibly well. I think I would say awareness out of the gate. I think when you look at Colorado, and if we can get you into one of these markets, you'll see where we have done the concentric circles. Again, I'll use Castle Rock, the Tech Center, Highlands Ranch, Littleton, they're all reasonably close together, and these stores do incredibly well on awareness. What you get from that is going to work, going to school, going to the high school football game, going out to dinner, you pass Black Rocks along the way, and I think that's been really, really strong for Colorado.

When you look at the marketing specific offerings, that segmentation has certainly helped. It drives great frequency and transaction. I think the other part of is it really helps with the value proposition that, as you're aware, high frequency business being coffee, when you can reward people for coming in, it's exceptional. To your point, I think awareness and building awareness through the programmatic marketing is fantastic. I think segmentation on loyalty is important. The best thing is we've got these great baristas that drive fantastic experience. That truly is the best marketing we can have.

Okay, great. Appreciate it. Thank you.

Thank you for being on.

Thank you.

Just quickly, as I realize we're coming to the end here, I wanna reiterate, and I had said this to Matt as we closed out, we have been taught, even before we went public, that it's really important to hit your commitments. Again, when you look at the 20 20 20, grow your same system-wide sales at 20%, your profit at 20%, and your unit growth, we have done that all three quarters. You know, in what is typically from a seasonality, our toughest quarter, the first quarter, we are at sales growth of 24%. We're at EBITDA growth at 24%, and units at 23%. Again, Robert Kaufmann initially set it up and Jon Vingo will continue to drive it, but that unit growth, the store weeks, the revenue, all of that will continue to be great.

If we get that with Clay Geyer's guidance on the operations and that great store level margin, we leverage in a big way. I wanna say thank you to the teams for another great quarter. I think it makes it much easier to have these calls when they perform the way they do. I wanna thank everybody for being on the call. I know there's a lot of preparation that goes into this, and we're super grateful. I hope everybody has a great night.

Thank you, sir. Ladies and gentlemen, thank you for your participation. That does conclude today's teleconference. Please disconnect your lines and have a wonderful day.

Good afternoon, everyone, and thanks for joining us for Black Rock Coffee Bar's fourth quarter results. Before we begin, we would like to remind you that this conference call may include forward-looking statements. These statements, which are subject to various risks, uncertainties, and assumptions could cause our actual results to differ materially from these statements. These risks, uncertainties, and assumptions are detailed in this afternoon's press release, as well as our filings with the SEC, which can be found on our IR website. We undertake no obligation to revise or update any forward-looking statements or information, except as required by law. During our call today, we will also reference certain non-GAAP financial information. We use non-GAAP measures to assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our operating performance.

The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Reconciliations of GAAP to non-GAAP measures can be found in this afternoon's press release and in our SEC filings. Joining me on the call today is our CEO, Mark Davis, and our CFO, Rodd Booth. Following our prepared remarks, we'll open the call for your questions. With that, I'll turn the call over to Mark.

Thank you, Will. Good afternoon, everyone. We appreciate you joining us today on our fourth quarter earnings call. I'll start by briefly highlighting our full-year performance before walking through our fourth quarter operational highlights. I'll then pass it over to Rodd, who will provide an update on our fourth quarter financials, followed by our outlook for 2026 and key metrics. 2025 was a year of strong execution and meaningful acceleration across the business. We delivered 10.1% same-store sales growth, a 16.4% growth stack over the last two years, supported by healthy traffic and strong guest engagement. We opened a total of 32 new stores over the course of the year ahead of our plan, broadening our presence in existing growth markets and driving above plan new unit cohort performance.

We achieved revenue growth of 25% and expanded adjusted EBITDA by 36% for the year, reflecting operational discipline, cost management, and strong store-level profit margins of 29%, a 130 basis point expansion versus the prior year. These exceptional full-year results underscore the durability of our model and give us tremendous confidence in the momentum we're carrying into 2026. Building off this strong foundation, our investments in our new store pipeline, supported by our growing team and a scalable development playbook, sets us on a clear path to achieve 1,000 units by 2035. In the fourth quarter, Black Rock delivered outstanding results, achieving revenue growth of 25% and adjusted EBITDA growth of 52% compared to the prior year period.

We opened 12 new locations in the quarter and same-store sales growth reached 9.3% or 18.8% on a two-year basis, with another quarter of positive comp growth across all of our markets. Heading into year-end, our teams remain focused on execution and advancing our three strategic priorities. One, deepening customer engagement. Two, strengthening our people-oriented culture. Three, expanding our market presence. These priorities are foundational to our business and will continue to support our long-term growth trajectory. I'll start with a few updates on customer engagement. Our overall same-store transaction growth was 4.2% in the fourth quarter and 11.2% on a two-year basis for the quarter, highlighting very healthy momentum across our business, supported by a number of engagement initiatives.

Starting with loyalty, during the fourth quarter, our loyalty rewards participation rate remained strong at 65%, continuing the trend of healthy guest adoption and growing engagement since the platform launched in June of 2024. Loyalty members are visiting more often and spending more per visit than non-loyalty members, underscoring the program's role in strengthening retention and deepening customer relationships. Our loyalty database continues to grow every day and has become a key channel for how we communicate and drive value with our guests. In just the first 18 months, we have built a strong data foundation and meaningful guest behavior insights, setting the stage for sustained program growth and customization potential. In the fourth quarter, we tested segmented, targeted offers across specific guest cohorts to improve relevance and performance.

Based on those results, we've established a more disciplined segmentation strategy for 2026 that we expect to drive measurable gains in engagement, transaction frequency, and offer efficiency, creating incremental value for both our guests and the business. We are very excited about the significant opportunities we see for loyalty as we expand our reach and elevate the digital experience to more Black Rock fans across markets. Beyond our loyalty program, digital sales also continue to support transaction growth, with app, online ordering, and third-party delivery driving greater guest frequency following our native Olo launch last year. In Q4, alongside our always-on media channels, we increased investment in paid media through a series of structured tests that have continued into Q1. We're using those results to refine a more performance-driven, regionally tailored approach going forward.

Paid media remains a strategic lever for us to efficiently build brand awareness and demand, and we will continue to invest with test and learn discipline to optimize returns by market. Turning to menu mix and performance, in the fourth quarter, we leaned heavily into holiday seasonal flavors across our LTO lineup. The menu featured drinks like Butterscotch Breve, sour candy Fuel with gummy worms, and guest favorite peppermint bark. These ran alongside a series of surprise and delight one-off drops throughout the quarter, including our Halloween Fuels, Magic Fuels, and Naughty and Nice Fuels, which help drive traffic, engagement, and trial. Our top-performing beverages for the quarter were the Peppermint Bark Blondie, Pumpkin Blondie, White Chocolate Milano Mocha, and Butterscotch Breve.

We also launched our second collaboration with influencer Avery Woods during the quarter, a tangerine strawberry pomegranate Fuel, which outperformed our first viral Avery Woods drink collaboration featured over the summer. The campaign provided valuable learnings on how to authentically connect with our core guests and extend our reach to new audiences through our influencer network and creator partnerships. This quarter, we've started to apply those insights more broadly as we explore a structured micro-influencer strategy to support future LTOs, NSOs, brand awareness, and menu innovation. We're prioritizing local creators who are already genuine fans of Black Rock and have an organic connection to our brand, allowing us to stay authentic while driving high intent engagement with opportunity to scale over time. As it relates to our food offerings, Egg Bites continues to exceed expectations with our guests, driving attachment and check growth over prior year as anticipated.

Product mix for Fuel and food increased sequentially during the fourth quarter, reflecting continued demand and engagement for our menu innovation and elevated sweet and savory food options. On innovation, this month, we're excited to partner with OLIPOP to launch a dirty soda drink as a seasonal limited time offer to kick off the new year. We're intentionally using LTOs to validate guest demand and performance before scaling new items system-wide. We're also continuing to innovate and test across food and functional beverage offerings as part of our 2026 pipeline. Taken together, our diverse menu and multiple points of service are driving healthy customer engagement. We believe they provide significant opportunity to further elevate brand visibility and expand within our markets.

Turning now to our people-oriented culture, investing in our teams and fostering a collaborative and performance-driven culture is translating into stronger guest connection and amazing engagement for team members. Retention rates continue to be a real strength at Black Rock, highlighting our unique model, approach, and incentives, which are grounded in business acumen, career growth, and operational execution across our teams. Team member turnover improved year-over-year, driven by the evolution of our learning management system, which delivers onboarding and training support, builds business acumen, and drives greater new hire confidence, which supports even stronger engagement with our guests. Store lead turnover also improved year-over-year, supported by our Career Roadmap training program, which focuses on elevating the business acumen and leadership skills of our retail leaders, enabling them to run their stores more effectively and thrive in their roles.

This program gives us confidence in the ever-growing pipeline of leaders at Black Rock who are well equipped to support our store opening plan. To complement the success of our Career Roadmap program, in the fourth quarter, we launched our new high potential talent development program in partnership with the Bold Font team, prepping our most advanced team members for senior leadership. In conjunction with our Career Roadmap, this talent development program is designed to build a high-performing organization while investing deeply in our people and their long-term career growth. As we've outlined, the career development and business acumen of our teams is a core business pillar at Black Rock. We're committed to teaching, coaching, and growing our people at every step, so they know Black Rock is the place to build a career, not just a job.

These programs meaningfully contribute to our success and have resulted in a stronger Black Rock delivering exceptional guest satisfaction. I'm incredibly proud of our team, and we are energized about continuing to develop our people pipeline for long-term growth. In addition to our training programs, our inventory management module, designed to enhance COGS performance and elevate business acumen across our employee base, continues to drive improvements. As we deepen our team's understanding of the why behind inventory management, the efficiencies we create allow us to reinvest those savings into our people. We are optimistic about the impact this program will have over time on the performance of each store, area, and region as we continue to scale its implementation. Finally, I want to highlight one of the most important moments in our year, our annual top quartile meeting, which took place in Scottsdale, Arizona, just last week.

It's a cornerstone of who we are as a company, a time when we come together to celebrate the year's accomplishments, recognize our top performers across the organization, and align on our goals for 2026. This gathering reinforces the culture we're building, one rooted in growth, accountability, and appreciation, and ensures our teams feel connected to both our purpose and our future. Last, I'll share a few updates on our expansion strategy in the fourth quarter. We opened 12 new locations across several growth markets, Arizona, Colorado, Texas, and California, bringing our store openings for the year to 32, ahead of plan, and our total store count to 181. Of the 12 new store openings in the quarter, we opened our first modular prototype with a lobby, marking an important milestone as we look to accelerate our speed to market and drive cash-on-cash returns.

Our California stores are already producing strong AUVs out of the gate, reinforcing the effectiveness of our disciplined and data-driven site selection strategy while also lifting brand awareness in the market. Following the successful opening of our first drive-through with a lobby in Southern California in the third quarter, our second opening in quarter four was another exciting addition in this high-performing market. More broadly, our 2025 new unit cohort continues to perform ahead of plan, exceeding sales forecasts, delivering strong store-level margin acceleration and strong cash-on-cash returns, while also leading the system in barista retention and guest satisfaction. This sustained outperformance, together with the depth of our development pipeline, gives us confidence in our ability to drive continued AUV growth from $1.3 million system-wide as we close the year.

As we communicated last quarter, unexpected landlord delays and extended permitting timelines caused several planned store openings to shift later in the quarter. This timing dynamic in the third quarter also reduced the store weeks we carried into the start of quarter four and modestly limited new unit contribution early in the fourth quarter. Despite the temporary shift in timing, underlying demand remained healthy, highlighted by our strong comp momentum and the continued outperformance from our newest stores. Our development pipeline has continued to mature and the learnings from this process have allowed us to refine our systems, strengthen cross-functional coordination and position ourselves for a more robust 2026 opening cadence, which ensures we capture the full benefit of store weeks throughout the year.

Our robust pipeline refined process and additional investments backed by our strong earnings and sales growth further drives our confidence to open 1,000 units over the next 10 years. As we step into a new year, we are energized about the opportunities ahead of us with significant white space for continued growth across our existing markets, supported by our deep bench of talented team members and leaders. Before turning it over to Rodd, I want to thank the Black Rock team, our baristas, our field operators, and our home office for their dedication and passion in serving our guests, our loyal guests for being a part of our community and making Black Rock part of their daily routines, and to our shareholders for their support as we pursue significant opportunities for growth and value creation ahead of us.

I also want to thank Jake Spellmeyer and Brian Pereboom, who have retired from their board roles effective February 25, 2026, to focus on family and pursue other interests. We're grateful for their contributions to Black Rock over the years and wish them the very best in this next chapter. With that, I'll turn the call over to Rodd to provide more detail on our fourth quarter 2025 financial performance and 2026 guidance.

Thanks, Mark. Good afternoon, everyone. We ended the 2025 calendar year with strong momentum across the business, we are excited about the growth and opportunity ahead in 2026. Let me start with a brief overview of our 2025 results before diving into our fourth quarter performance. For the 2025 year, we achieved $200.3 million in total revenue and $27.5 million in adjusted EBITDA. We recognized revenue growth of 24.5%, driven by 10.1% same-store sales growth and 32 new store openings, ending the year with 181 stores and counting. Our adjusted EBITDA growth was 36.2% and our adjusted EBITDA margin expanded 120 basis points to 13.7%.

We're very proud of our team for their strong performance throughout 2025, which underscores the long-term growth opportunity that Mark highlighted earlier. Turning to the fourth quarter, we generated $53.6 million in total revenue, an increase of 25.3% year-over-year. Our growth was fueled by 9.3% same-store sales growth despite lapping a strong 9.5% comp in the prior year, along with same-store transaction growth of 4.2% and 12 new store openings during the quarter. Store-level profit was $15.7 million in the fourth quarter, up 35.8% over the prior year, and store-level profit margin was a strong 29.4%, 230 basis points favorable year-over-year.

Notably, for the full-year, store-level profit margin expanded to 29.2%, up from 27.9% in the prior year, highlighting the commitment and execution of our retail teams across the organization, driving operating efficiencies and store-level profitability. As Mark mentioned, our annual top quartile meeting last week was a key moment for us to recognize our team's contributions, celebrating their success and building excitement for the year ahead. Consolidated adjusted EBITDA for the quarter was $6.5 million, up 52.4% over the prior year as we executed against our strategic initiatives. Beverage, food, and packaging costs were $14.7 million or 27.4% of total revenue and 190 basis points favorable year-over-year. Store-level labor costs were $11.4 million or 21.3% of total revenue and 70 basis points favorable year-over-year.

Occupancy and related expenses were $4.4 million or 8.3% of total revenues and 20 basis points unfavorable year-over-year. Pre-opening costs were $1.2 million or 2.3% of total revenues, driven by 12 new store openings in the quarter. As Mark mentioned, we have continued to invest and reinforce our pipeline to support our long-term target of 1,000 stores by 2035. Cost margins improved year-over-year as a result of great execution from our retail teams, in addition to closely managed procurement and pricing with our supply chain team. We closely track cost centers and work with our partners to offset any potential increases whenever we can. As it specifically relates to coffee costs, while prices remained elevated through the fourth quarter and into the early part of 2026, we do anticipate some relief in the second half of the year.

Adjusted SG&A was $8 million in the quarter or 15% of revenue, compared to $6.4 million in the prior year period. We will continue to manage our SG&A growth with discipline to ensure it supports our ongoing expansion of our business. Our approach remains deliberate and focused, investing in team growth that enables our strategic initiatives, fuel sales performance, and underpins our new store development. Shifting to the balance sheet. As of December 31st, 2025, we had cash and cash equivalents of $28.4 million and a total debt position of $26.7 million, consisting of $18.7 million outstanding under our current credit facility and $8 million of financing obligations related to failed sale-leaseback arrangements.

We had a net cash position of $9.7 million and access to our unfunded revolver of $25 million. As it relates to CapEx, we invested $35.3 million for the year. Total CapEx for our 2025 class was $27.5 million before TI contributions of $6.7 million, with the remaining investments attributable to our existing stores and our 2026 pipeline of new stores. Build costs remain stable despite a volatile environment, a testament to our disciplined project management and vendor relationships. As Mark mentioned, we have made additional investments in our pipeline to support our growth target and build on the momentum from 2025. Turning to our outlook.

As we look ahead to 2026, we're building off an exceptionally strong year of performance in 2025, marked by industry-leading same-store sales growth, strong store level margins, and continued unit expansion. While it's early in our journey as a new public company, and our performance to date has been strong, we have tremendous conviction in our model. Our 2026 outlook aligns with our long-term algorithm, reflecting strong momentum in the business and the investments we're making to position the company for sustained long-term success.

For the full-year of 2026, we expect 36 new store openings, total revenue in the range of $255 million-$257 million, same-store sales growth in the mid-single digits, consolidated adjusted EBITDA in the range of $33.5 million-$34.5 million, capital expenditures in the range of $40 million-$41 million, including anticipated tenant improvement allowances or $58 million-$61 million in excluding anticipated tenant improvement allowances of $18 million-$20 million. Our CapEx guidance supports our 2026 class, our existing stores, as well as investments in our 2027 class later this year. Our teams continue to execute on our strategic initiatives with discipline, driving strong performance across our organization and the markets we operate in.

Our ability to deliver a differentiated guest experience paired with a premium product offering, engaged teams, and a scalable expansion model gives us confidence in our ability to sustain this trajectory. Looking further ahead, we remain firmly committed to delivering on our long-term targets of 20% annual new unit growth, revenue growth of 20% or more, mid-single digit same-store sales growth, and adjusted EBITDA growth that outpaces revenue growth. With this trajectory, we are confident we will achieve 1,000 units by 2035. With that, I'll turn it over to the operator to open the line for questions.

Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. In the interest of time, we ask that participants limit themselves to one question and one follow-up. One moment, please, while we poll for questions. Thank you. Our first question is from John Ivankoe with JPMorgan.

Hi. Thank you so much. The question is on new unit development. I wanna go a couple places with this. First, an increase in CapEx from $35 million approximately to $40 million-$41 million in 2026. Does that, you know, partially include maybe more units than we were previously expecting in 2027? At least the number that I have in the model is 43 units in 2027, and I wonder if there's kind of a change.

You know, to that number that we can begin to talk about in 2026. Secondly, if I may, as you're entering new markets and also as competition is entering your markets, are you seeing a change in the competitive intensity for your employees? Which sounds like it's not, but, you know, comment on your employees, customers, and also site availability as capital in this industry is clearly chasing some of the high returns that you and some others are getting. Thank you so much.

Thanks for the question, John. I think I'll take the first one and the first part, and Mark can take the second. To your point about CapEx, you're spot on it, and Mark mentioned it, as did I. You know, I think what we learned in the third quarter and the fourth quarter was just really giving ourselves a little bit more in terms of investment in the pipeline and more opportunity. When you think about those targets for 2026, probably about 25% of that CapEx is actually going to be committed to the 2027 pipeline. Obviously, we've got the 2026 class of stores and then the ongoing maintenance CapEx. Yes, to your point, a significant portion of that is going to be for the 2027 class. You had asked another question. What was that?

Okay. Yeah.

Yeah.

Is 43 still the right number for 2027, or might there be an upward bias to that relative to the previous expectations?

No, we're still committed to the modeling at the moment. Again, as we've continued to build out not only the 2026, but the 2027 class, we're getting way out in front of that. Again, when we look at some of these stores where they have a longer build time, we think about some of these reverse build-to-suit where there's about a nine to 12-month build time for us, you'll see some of that CapEx in 2026 for stores that open in 2027, but no change to total units.

John, you asked about the competitors in markets. I think, you know, as Rodd pointed out, when you look at our third quarter with the store weeks, we have adjusted the pipeline to make sure that not only are we gonna be great on store weeks, but we're gonna be great on the units. You know, when you look at the availability, we have seen no pressure. If anything, we've seen significant opportunity of volume. The quality of sites has improved, and nothing has suggested that the market dynamics are changing. Us being a growing brand again has made us a really attractive tenant. You also asked about the people pipeline. Again, 98% of our team members above the barista are promoted within.

Again, as you think about the acumen, the Career Roadmap, the leadership pathway, the high potential talent development, profit sharing, and then the scorecard, all of that has produced very strong store leads, multi-store leads, and AMs in every state that we're in. We've got an incredibly deep bench. When you think about the career development, both professional and personally, it's really helped. That ownership from the team from the ground floor has really made us a great growing company. I think ultimately the answer to your question is we're gonna make sure we hit the store weeks. We're gonna make sure that we hit the development pipeline that we've committed to. Then on the people side, we've really doubled down to make sure that we've got the right teams to open each of those stores up in a quality way.

Thank you so much, guys.

Thanks for being on, John.

Our next question is from Andy Barish with Jefferies.

Hey, guys. Good evening. two things I just wanted to touch on. The first being, you know, kinda increased paid media and still I know in the testing mode, but I'm assuming that's in your newer markets. Would you care to kind of comment on how many of those newer markets you're seeing or testing paid media in to drive brand awareness?

Andy, thanks for being on. You know, I think, one, paid media doesn't drive loyalty. It obviously drives awareness. You know, when you look at our loyalty at 18 months, we've got about two million members, and that participation rate is growing month after month. Regarding the paid media, we're using it to support all of the new store openings and the new member acquisition. Again, while it's still very early, what we've seen is an increased personalization and scale, and that's driving higher traffic check and overall sales. You know, as you know, Jessica, our CMO, she's done great things with it. We not only feel good about how the paid media has gone, but we're gonna continue to do more of it. As you pointed out, we're gonna do it in all the new markets.

Gotcha. just circling back on the OLIPOP Dirty Soda, you know, LTO, is there a implication there that if it works really well in terms of customer demand, that that could wind up being, you know, a permanent addition to the menu in terms of Dirty Sodas?

You know, when you look at OLIPOP, you're aware we're only a couple days in, but the partnership was intentional, and it's driven by guest demand for functional, cleaner label beverage. You know, I think it allows us to enter the Dirty Soda space in a differentiated, elevated way. To your point, the way that we roll out from an expansion system-wide, it's an LTO today, and the hope is that we gain some insights that guide us to the next steps. You know, we certainly see it as an avenue where we can grow the business, and at the moment, we feel really strongly about it.

Thank you very much.

Thank you, Andy.

Our next question is from David Tarantino with Baird.

Hi. Good afternoon. You know, Mark, I just wanna come back to the timing of your openings, I guess the second quarter in a row here, we've seen the openings, you know, kind of very back weighted in the quarter and causing you not to capture all the revenue that you might have hoped for. I guess the explanation for that is kind of landlord delays, I'm just wondering how you, how you resolve that issue. I know you sound pretty confident that you can get that done, but it sounds like the explanation is a bit out of your control. I guess, what are you gonna do exactly to sort of get a more even weighted set of openings across the quarter?

Yeah, David, thank you for being on, and I appreciate the opportunity to talk about it. You know, I think when we went public, we had a pipeline where we felt we had enough buffer. What we found is the way to be better at that is to not only have more stores in the pipeline, but also, you know, going through the data-based approach and pushing on that. When you look at store weeks, I would say generally that what was once our opportunity is now one of our strengths. I think when you look at the third quarter, when we had the landlord issues, we pulled stores forward from the fourth quarter, which obviously took some of the stores out of the fourth quarter. We did that again to make sure that we were ahead.

What we did, and I'm really proud of, you know, the team was able to hit the units. Again, I think for the future where we've added into the pipeline, we are far better set up for success. I'd say that we have better systems. We've got cross-functional support that works. When you look at the 2026 pipeline, David, we have a larger pipeline, and we have more buffer. Again, based on that, what you're gonna see is better performance on store weeks. We'll be ahead of it, and what'll end up happening is we're gonna have this strong pipeline, quality stores, and again, the goal is to eclipse that commitment on store weeks.

You know, really, if I could go back in time, we would have had more buffer as we went public, and I think what we've done now is made sure moving forward that we're in a better place. You won't see that in the 2026 year.

Got it. Thank you for that. If I can tack one more on development. You mentioned this modular prototype, that you opened in the quarter. Can you elaborate on what the benefits of that prototype are and maybe specifically address whether it's lower cost to build or the same cost? I guess, you know, kind of what are the total benefits of that prototype?

Of course. When you look at the modular, we originally had drive-through only, and we now have a modular that is also with a lobby. Again, because we build end caps, reverse build-to-suits, build-to-suits, and ground leases, it's very site-specific, and as you think about it varies quarter-to-quarter dependent upon the site. It does in fact reduce the capital expenditures. I think the greatest thing, back to your first question, is it speeds up store openings, and it gets us more store weeks. With those two formats, we'll continue to do the drive-through only and the drive-through with the lobby, and that'll help us leverage. I think when you're looking at the units, you know, we opened six in Arizona, one in Texas, four in Colorado, and one in California in the fourth quarter.

What we're seeing again is that we're going into those high-performing markets, and we're seeing really strong success with the current cohort and the prior cohort, and that's been really good for us. Back to your original question, by having more quality sites in the pipeline, and again, pushing them earlier into the quarter, you'll see that in the quarters ahead, we will have that strong same-store sales with the addition of the store weeks, and it sets us up to leverage and hit the guidance that Rodd provided.

Great. Thank you.

Appreciate you being on, David.

Our next question is from Sharon Zackfia with William Blair.

Hey, thanks for taking the question. You know, I think, in the adjusted EBITDA guidance, it's, you know, for a slight decline in margin year-over-year, I think 30-60 basis points. Can you talk about what the embedded outlook is for unit level margins within that? Is there enough opportunity with the inventory management system to kind of keep that margin stable even with higher coffee costs in the first half?

Yeah. Thanks for the question, Sharon. I think to start, what I would say is, when you look at our overall company adjusted EBITDA margin, you know, we're keeping it pretty consistent with our modeling, and what you have is all of these new stores that are coming online, and we've modeled them, you've seen it, where they're coming online, and they're copying just below the base, and then they ramp up to the base between, call it, that 18, 24, 36-month range. You know, really consistent with how we've been thinking about it. I think the opportunity in terms of the margin, you're essentially asking, can it be better? I think, you know, we saw costs elevated with beans, you know, throughout 2025, as I mentioned, end of 2025 and into 2026.

We have seen some relief coming. I think one of the things we take a lot of pride in, our team does a really, really good job and is really executing on our internal strategic initiatives. Mark mentioned the inventory management. We talked about it last time, but that was a big one to help out in terms of margin, and we still think we have opportunity there. Even if in the first half of the year, the coffee costs remain high, they're not gonna be much higher than they were in the fourth quarter and really the opportunity is in the second half.

We're also trying to be cautious with that because last year was a pretty tough year to predict it that way. I think we feel really good about the guidance, really feel really good about our model, and then it's our opportunity and our team's opportunity to continue to go out and execute and, you know, continue performing at a high level.

Mark, you talked about the segmented targeted offers that you did in test, and you kind of teased with some positive results you saw there. Can you put some more, maybe meat on the bone of what you saw and how quickly you're going to roll that out more broadly in 2026? Thanks.

You bet. You know, Sharon, when you're looking at the marketing spend, we had tested segmented targeted marketing to deliver more customized offers. That's the first time we had done that. What we found is that the broad scalable approach, one being data-driven, has worked really well for us. You know, Jess has done a great job of pushing that multi-channel strategy, and so you're seeing it across loyalty. We've obviously got paid media innovation in the new store openings. Rodd spoke to this when he talked about the sales and the traffic. What you're seeing is it's been effective in driving traffic and spend. It's obviously helped with awareness. I think for everybody on the call, what we've tried to do, and Jess has pushed real hard on this, is be responsible in our spend.

We're increasing year-over-year, and really what we want from that is to support the unit growth, the brand awareness, and we wanna make sure it's targeted. We'll have more results as we come into the first quarter, and then I think what you'll see is we'll continue to do that through the year. It's obviously helped us with the sales and the transactions, and we see it as something we're gonna push in the future.

Thank you.

Thank you, Sharon.

Our next question is from Brian Harbour with Morgan Stanley.

Yeah, thanks. Good afternoon, guys. Since we're almost through it, I guess, would you care to say anything about the first quarter? Do you think, would you sort of endorse current consensus estimates, or is the growth rate, you know, kind of consistent with your full-year guidance, for example?

Of course. Brian, thank you for being on. When you look at the first quarter, we feel really, really good about it. You know, the quarter is trending strong, and it allowed us to provide that guidance. We're excited about the momentum. You know, with that momentum, we had about 200 basis points of weather in January that was in Texas. Again, based upon what we're seeing, we still felt good to increase our initial guidance. I would say, generally speaking, the first quarter is off to a great start, and we feel good about it.

Okay, sounds good. How are you thinking about new store productivity this year? It seems like, you know, you have an expectation that it'll be higher than the prior year. Is that driven by sort of the markets you're entering? Or maybe comment specifically on that piece.

I'll take that one, Brian. I think from a terms of store productivity, we're essentially modeling our stores to produce similar margins as they did in 2025. I think our opportunity is always to, as Mark mentioned earlier, to go after the sales, to leverage those sales into, you know, better margin. Also, you know, just continue to focus on those newer cohorts and the way those stores ramp to profitability. You know, I think we feel really good from a modeling standpoint, and our opportunity is just for the teams to continue to go out and execute and our new stores to continue to get better.

Thank you.

Our next question is from Chris O'Cull with Stifel.

Thanks, guys. This is Patrick on for Chris. Mark, given the momentum in the business, I know at one point you were holding back on, you know, discounted loyalty offers within the loyalty program. You know, I was wondering if that was still the case here as you think about going into 2026. As you think about the slate of LTOs that you have coming in 2026, given you had a lot of effectiveness in 2025, what gives you confidence you can continue to drive some of that strong engagement you've seen from the innovation standpoint this year?

Yeah, Patrick, it's great to hear from you. I think when you look at our marketing, you know, we had always planned on doing segmented offers and driving more of the loyalty. I think, you know, one of the things that we're very proud of, and Rodd spoke to this, but when you look at our two-year comp, it's gonna be right around 18.894% on average. So, you know, one of the things that Jessica again has pushed on is the ability to go out and test these different offers and try them and all of the above there. We obviously are looking at collaborations. You know, I spoke to it on the call, but we had a very strong second collaboration around the LTO.

You think about the OLIPOP we're doing that's coming on, and all of these things I think are incremental. I'll go back to Egg Bites for a moment. You know, Egg Bites has been really strong for us as well. What we've seen there is while, you know, coffee and beverage are our primary focus. What we've seen is that the LTOs, the segmented loyalty, and then obviously the food platform has provided opportunities for us to grow our business and grow our AUV, which we're really proud of. You look at that AUV, and we said this in the script as well, but we came in right at $1.3 million.

Again, when you look at that same-store sales and how it's growing, I think what we see is we're going to be able to continue to grow the business and leverage, and all of the platforms I spoke to earlier help with that.

Great. That's helpful. Rodd, I know you touched on the fact that, you know, EBITDA is growing at a slightly slower rate than revenue this year, and that's largely due to coffee costs. Is there anything else in the sort of the waterfall of the P&L down to EBITDA that we should keep in mind that's kinda helping to drive that dynamic outside of elevated coffee costs this year?

No. I think, again, I think we even touched on this last call, when you think about coffee, it really represents just under 3% of our net sales. Certainly if it were to stay elevated, it could impact the business. Like I said, you know, we're buying coffee four to six months out, and I think if anything, we expect that to continue to come down, which would help. I think in terms of store productivity, we talked about that one. As a company, you know, we're just continuing to manage our G&A and the growth of that G&A, especially as a new public company, closely. You know, Mark mentioned it, we'll continue to invest in marketing, trying new things. We'll continue to invest in the team to really support our growth.

We're really happy with our modeling of, you know, how we think about sales, how we think about profitability from the stores, and then the overall company profitability.

Got it. Helpful. Thanks, guys.

Thanks for being on, Patrick.

Our next question is from Jared Klein with Raymond James.

Hi, this is Jared Klein on for Brian. Thanks for taking my question. Just two quick ones. Sorry if I missed this, but could you share the level of commodity inflation and pricing that is embedded in the guidance? Just more of a high-level one on the customer base. Are there any changes you may be seeing in order patterns or maybe daypart trends that are worth noting? Thanks.

Sure. Jared, thanks for the question. What was the first part of the question? Sorry, it cut out for me.

Yes. Could you share the level of commodity inflation and pricing that is embedded within the guidance?

Yeah. From a pricing standpoint, you know, we've continued to approach price, you know, essentially with the goal of being neutral with inflation. I think we saw in 2025 that was harder to do. We've continued to do that in 2026, although I don't think you'll see us take as much price just considering, you know, we've got healthy margins. We're really happy with our margins, our real opportunity is to go after more sales and leverage they provide. From a modeling standpoint, we are expecting the same level of, you know, store-level productivity. Really the balance between price and inflation overall is something we're continuing to manage and monitor, but again, feel pretty good about it, knowing, you know, we've got some opportunity for it to come down with coffee.

Our other costs, primary inputs, when you think about dairies, the sugars, and the things like that, they've been very stable for us.

Then, Jared, the second part of your question, I'll talk a little bit about the positioning. You know, our demographic is roughly 18-45, and what that does is it allows us to have a little bit diversity in the mix. We are coffee first. Again, our coffee mix is gonna be about 55%. Our energy has grown to about 24%. Again, you had asked about dayparts and different mediums. The digital mix is gonna be right around 51.5%-52% on coffee, and it's gonna be around 27% on energy. With the Egg Bites and everything else, our food has grown to about 12%. All of this, what it does for us, especially with that broad demographic, we lean heavy on coffee, and coffee is obviously resilient, which is great for us.

We focus on that strong customer experience. When you think about the strategy, when you're pushing on quality beverage and you've got that great experience, it attracts new guests and increased transaction frequency, which is great. I think overall, when you look across the company, while the volume is growing, our mix has stayed fairly consistent, and I think that gives us great confidence in our brand growth, even despite the macroeconomic pressures that some of our peer group is feeling.

That's helpful. Thanks.

Thank you. There are no further questions at this time. I would like to hand the floor back over to Mark Davis for any closing comments.

Thank you. I appreciate it very much. I wanna thank everyone for what was an outstanding fourth quarter and a 2025 year. I'm also excited for the guidance we provided for 2026 and our ability to continue to advance our company for our customers, our teams, and our shareholders. I wanted to reiterate, because I think we had a really strong quarter and a really strong year, that in the fourth quarter, revenue growth was 25.3%. Again, the same-store sales over the two years was 18.8%, averaging 9.4%. The store-level profit in the fourth quarter was up 35.8% over the prior year. Going to 2025, the revenue growth was 24.5%, and it was driven by same-store sales of 10.1%. Again, the EBITDA for the year was 36.2% better.

We opened 32 stores against a target of 30, which is growth of 21.4%. Back to David's question, we have continued to learn and get better on the store weeks, which you'll see as we move forward. Better based upon the performance in 2025, Rodd came out and helped guide the $255 million-$257 million of total revenue. Again, we guided to 33.5%-34.5% of consolidated adjusted EBITDA, which is all ahead of our long-term algorithm. Most importantly, we continue to double down on our world-class teams. We run exceptional team member turnover, and our baristas continue to be the point of difference with the experience they provide. Our culture and our exceptional retention continues to drive what we believe is a very sustainable team member model.

It continues to help us exceed expectations. I just wanna say that I'm beyond grateful for our teams and everyone that continues to believe in what Black Rock can be. I appreciate your time today.

This concludes today's conference call. You may disconnect your lines at this time. Thank you again for your participation.