Black Rock Coffee Bar, Inc.

Good afternoon, and welcome to BlackRock 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 BlackRock Coffee Bar. Thank you, sir. You may begin.

Good afternoon, everyone, and thanks for joining us for BlackRock Coffee Bar's first 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, Rod Booth. Following our prepared remarks, we'll open the call for your questions. And 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. Finally, 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 BlackRock 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 nine 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 two-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 to 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 BlackRock. 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 opened 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 BlackRock 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 discipline, 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 BlackRock. 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 first quarter of 2026, helping maintain same-store sales and guest engagement during a seasonally softer period for BlackRock. 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 only 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 lapped 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 Peak. 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 BlackRock 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 BlackRock 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 want to take a moment to welcome John Vingo to the BlackRock team as our new Chief Development Officer. I've been fortunate enough to work with John during my time at both Panera and Tokyo Joes, 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 want to thank Bobby Kaufman for his many contributions to BlackRock, 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 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, five 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. Furthermore, we expect to comfortably hit our commitment of a minimum of 10 stores in quarter two 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 deployments. We continue to expect to 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, BlackRock Coffee Bar stands apart by pairing drive-through 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 teams. 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 BlackRock to more guests across the country. Before turning it over to Rod, I want to thank the entire BlackRock 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 BlackRock 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 Rod to provide more detail on our first quarter 2026 financial performance.