Black Rock Coffee Bar, Inc.

Good afternoon, everyone, and thanks for joining us for BlackRock 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, Rod 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 Rod, who will provide an update on our fourth quarter financials, followed by our outlook for 2026 and key metrics. 2025 was the 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-planned new unit cohort performance. As a result, we achieved revenue growth of 25% and expanded adjusted EBITDA by 36% for the year, reflecting operational discipline, cost management, and strong unit-level economics with 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, BlackRock 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. And 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 BlackRack 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 and 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 brevet, 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 helped 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 brevet. We had 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 BlackRock 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, and 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 BlackRock, 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 BlackRock who are well-equipped to support our store opening plan. To compliment the success of our career roadmap program, in the fourth quarter, we launched our new high-potential talent development program in partnership with the BoldFont 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 BlackRock. We're committed to teaching, coaching, and growing our people at every step so they know BlackRock is a place to build a career, not just a job. These programs meaningfully contribute to our success and have resulted in a stronger BlackRock 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 refine 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 Rod, I want to thank the BlackRock 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 BlackRock 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 Paraboo. who have retired from their board roles effective February 25th, 2026 to focus on family and pursue other interests. We're grateful for their contributions to BlackRock over the years and wish them the very best in this next chapter. With that, I'll turn the call over to Rod 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, and 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 counties. 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. And 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 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. And 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 cost remains stable despite a volatile environment, a testament to our discipline project management and vendor relationships and as mark mentioned we have made additional investments in our pipeline to support our growth target and build on the momentum for 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 today 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 2026, we expect 36 new store openings, total revenue in the range of $255 to $257 million, same-store sales growth in the mid-single digits, and consolidated adjusted EBITDA in the range of $33.5 to $34.5 million, and capital expenditures in the range of $40 to $41 million, including anticipated tenant improvement allowances, or $58 to $61 million, excluding anticipated tenant improvement allowances, of $18 to $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 1 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 key. In the interest of time, we ask the 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 Ivanko with JP Morgan.

Hi, thank you so much. The question is on new unit development. I want to go a couple places with this. First, an increase in CapEx from 35 approximately to 40 to 41 million in 26. Does that, you know, partially include maybe more units than we were previously expecting in 27? At least the number that I have in the model is 43 units in 27, and I wonder if there's kind of a change there. to that number that we can begin to talk about in 26. And 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 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. And so 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. But, yes, to your point, a significant portion of that is going to be for the 2027 class. And then you had asked another question. What was that?

Okay, so – Yeah, is 43 still the right number for 27, 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 26th but the 27th class, we're getting way out in front of that. And so, 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-suits where there's about a 9- to 12-month build time for us. You'll see some of that CapEx in 26 for stores that open in 27, but no change to the total units.

And then, John, you asked about the competitors and markets. And I think, you know, as Rod 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 going to be great on store weeks, but we're going to be great on the units. You know, when you look at the availability, we have seen no pressure. And if anything, we've seen significant opportunity of volume there. 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. And, 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. And when you think about the career development, both professional and personally, it's really helped. And that ownership from the team, from the ground floor, has really made us a great growing company. And so I think ultimately the answer to your question is we're going to make sure we hit the store weeks. We're going to make sure that we hit the development pipeline that we've committed to. And 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, kind of 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 to drive brand awareness?

So, 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 2 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. And 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. And so, 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 going to continue to do more of it. And as you pointed out, we're going to do it in all the new markets.

Gotcha. And then just circling back on the Olipop, Dirty Soda, you know, LTO, was there an 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?

Yeah. So, 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. And 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. Mark, I just want to come back to the timing of your openings. And I guess the second quarter in a row here, we've seen the openings kind of very back-weighted in the quarter and causing you not to capture all the revenue that you might have hoped for. And I guess the explanation for that is kind of landlord delays. And I'm just wondering 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. So I guess, what are you going to do exactly to sort of get a more even-weighted set of openings across the quarter?

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. And 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 database approach and pushing on that. And so 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. And what we did, and I'm really proud of, you know, the team was able to hit the units. And, 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 and again based on that what you're going to see is better performance on store weeks we'll be ahead of it and what will end up happening is we're going to have this strong pipeline quality stores. And again, the goal is to eclipse that commitment on store weeks. 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. And so you won't see that in the 2026 year.

Got it. Thank you for that. And then 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. And so when you look at the modular, we originally had drive-through only, and we now have a modular that is also with the lobby. Again, because we build NCAPs. Reverse build-to-suits, build-to-suits, and ground leases, it's very site-specific. And as you think about it, it varies quarter-to-quarter depending upon the site. It does, in fact, reduce the capital expenditures. And I think the greatest thing, back to your first question, is it speeds up store openings and it gets us more store-weeks. And so 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 obviously, we opened six in Arizona, one in Texas, four in Colorado, and one in California in the fourth quarter. And 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. And so 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 Rod provided.

Great. Thank you. Appreciate you being on, David. Our next question is from Sharon Zacharias with William Blair.

Hey, thanks for taking the question. You know, I think in the adjustity with guidance, it's, you know, for a slight decline in margin year over year, I think 30 to 60 BIPs. Can you talk about what the embedded outlook is for unit level margins within that? And 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 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. And so, 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, and I think one of the things we take a lot of pride in, our team does a really, really good job in, is really executing 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 going to be much higher than they were in the fourth quarter and really the opportunity in the second half. But we're also trying to be cautious with that because last year was a pretty tough year to predict it that way. And so 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.

And then, 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 26? Thanks.

You bet. And so, you know, Sharon, when you're looking at the marketing spend and We had tested segmented targeted marketing to deliver more customized offers. That's the first time we had done that. And 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 areas. We've obviously got paid media, innovation, and the new store openings. And Rod spoke to this when he talked about the sales and the traffic. But 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 want to make sure it's targeted. And so 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 going to push in the future.

Thank you. Thank you, Sharon.

Our next question is from Brian Harbor 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. So when you look at the first quarter, we feel really, really good about it. You know, the quarter's 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. But again, based upon what we're seeing, we still felt good to increase our initial guidance. And so 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 have an expectation that it will 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 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, and then also, you know, just continue to focus on those newer cohorts and the way those stores ramp to profitability. And so, you know, I think we feel really good from a modeling standpoint, continue to go out and execute and our new stores continue to get better.

Thank you. Our next question is from Chris O'Call with Stiefel.

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 discounted loyalty offers within the loyalty program. And I was Wondering if that was still the case here as you think about going into 2026. And as you think about the slate of LTOs that you have coming in 2026, given you had a lot of effectiveness in 25, what gives you confidence you can continue to drive some of that strong engagement you've seen from the innovation standpoint this year?

Yeah, and Patrick, it's great to hear from you.

I think when you look at our marketing, 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 Rod spoke to this, but when you look at our two year comp, it's going to be right around 18.8, nine, four on average. And so, you know, one of the things that, that Jessica again has pushed on is the ability to go out and test these different offers and try them and, and all of the above there. Uh, 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, really strong for us as well. And 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 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. And 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. And then, Rod, I know you touched on the fact that EBITDA is growing at a slightly slower rate than revenue this year, and that's largely due to coffee costs. But is there anything else in the waterfall of the P&L down to EBITDA that we should keep in mind that's helping to drive that dynamic outside of elevated coffee costs this year?

No, I think, again, when you – I think we even touched on this last call, but when you think about coffee, it really represents just under 3% of our net sales. And so certainly if it were to stay elevated, it could impact the business. But 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. And then as a company, we're just continuing to manage our G&A and the growth of that G&A, especially as a new public company closely. Mark mentioned it, but we'll continue to invest in marketing, try new things. We'll continue to invest in the team to really support our growth. But we're really happy with our modeling of 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 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 better in the guidance? And then just more of a high-level one on the customer base. Are there any changes you may be seeing in order patterns or maybe day part 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.

Yeah, could you share the level of commodity inflation and pricing that is embedded within the guidance?

Yeah, so 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, and our real opportunity is to go after more sales and leverage they provide. And so from a modeling standpoint, we are expecting the same level of, you know, store-level productivity and 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 we've got some opportunity for it to come down with coffee. And then our other costs, primary inputs, when you think about dairies, the sugars, and the things like that, they've been very stable for us.

And then, Jared, the second part of your question, and I'll talk a little bit about the positioning. You know, our demographic is roughly 18 to 45. And what that does is it allows us to have a little bit of diversity in the mix. We are coffee first. And, again, our coffee mix is going to be about 55%. Our energy has grown to about 24%. And, again, you had asked about day parts and different mediums. The digital mix is going to be right around 51.5, 52 on coffee, and it's going to be around 27 on energy. And 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 And 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. And so 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 want to thank everyone for what was an outstanding fourth quarter in a 2025 year. I'm also excited for the guidance we provided for 26 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%. And 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 the target of 30, which is growth of 21.4. And 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 25, Rod came out and helped guide the $255 million to $257 million of total revenue. And again, we guided the 33.5 to 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 that continues to help us exceed expectations. And I just want to say that I'm beyond grateful for our teams and everyone that continues to believe in what BlackRock 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.