Black Rock Coffee Bar, Inc. Class A Common Stock (BRCB) Earnings

Management highlights

- Core Strategic Priorities * Deepen customer engagement to drive frequency, repeat visits, and same-store sales * Strengthen people-oriented culture to drive guest satisfaction, employee retention, and margin support * Expand market presence to capture untapped growth opportunities - Customer Engagement Updates * Menu innovation and seasonal offerings are core to growth; seasonal fuel and new food items expand afternoon/evening day part demand. Seasonal drinks including Orange Blossom Mocha, Blueberry Cobbler Latte, and Prickly Pear Fuel performed well. Grilled cheese, tested as a limited summer offering, was rolled out system-wide and added as a permanent menu item due to strong guest demand. * Digital sales reached 17.2% of total revenue in Q2, driving higher average checks and convenience across app, third-party delivery, and order ahead platforms. * Loyalty program participation increased to 68% of transactions; loyalty members have higher visit frequency and average spend than non-members. Personalized segmented offers are being tested to drive incremental afternoon visits, with positive early results. A new customer data platform was launched to enhance marketing engagement outside of the loyalty program and convert more guests to members. * Paid programmatic media is expanding to drive top-of-funnel growth and attract first-time guests, working in tandem with loyalty to build long-term customer lifetime value. - People & Culture Updates * Store-level margins of ~30% are supported by strong employee retention: annualized team member turnover is 59.8% (roughly half the industry average), and store lead turnover is 23.5% (below industry norms). 98% of store leaders are promoted from within, with a fully staffed leadership pipeline for all stores planned to open in the next 12 months. Training and development programs such as BlackRock University deepen the internal talent bench, creating a sustainable competitive advantage. - Store Development & Expansion * Opened 10 new stores in Q2 2026, reaching 200 total system-wide stores, with 19 new openings in the first half of 2026. 42 new stores have been opened in the last 12 months, representing 27% unit growth. * Newer stores, particularly in California, are outperforming expectations: new California stores (open <1 year) are trending to a first-year average unit volume (AUV) of $1.6 million, with strong profitability and attractive returns. A total of 7 California openings are planned for 2026, with 12-15 planned for 2027, reaching over 20 total stores in the market by end-2027. * Rigorous data-driven site selection is in place under the new Chief Development Officer, with a largely committed development pipeline for 2026 and 2027. The company remains on track to reach its long-term target of 1,000 stores by 2035.

Guidance

- Full-year 2026 new store opening guidance was raised to at least 38 stores, up from the prior guidance of 36 stores, driven by a strong back-half weighted development pipeline. - Full-year 2026 total revenue guidance is maintained at $255 to $257 million, representing 27% year-over-year growth. - Full-year same-store sales guidance is maintained at mid-single-digit growth. - Adjusted EBITDA guidance was raised to $34 to $35 million, up from the prior guidance of $33.5 to $34.5 million, representing 24% to 27% year-over-year growth, with 28% to 35% adjusted EBITDA growth expected in the second half of 2026. - Full-year 2026 capital expenditure guidance is set at $42 to $43 million including tenant improvement allowances, or $57 to $59 million excluding $15 to $16 million in tenant improvement allowances. Approximately 30% of 2026 capital spending ($13 to $14 million) is allocated to advance the 2027 new store pipeline to front-load future openings. - The company reaffirmed its long-term growth targets: 20% annual unit growth, 20%+ annual revenue growth, mid-single-digit same-store sales growth, and adjusted EBITDA growth that outpaces revenue growth, with the 1,000-store by 2035 target maintained.

Segment performance

Black Rock Coffee Bar operates as a single business segment of specialty coffee and food retail. For Q2 2026: Total revenue was $63 million, representing 25% year-over-year growth. Same-store sales grew 4.2% year-over-year (15.1% on a two-year stacked basis), with price contributing 2.4% and average check growing 3.8%, while transactions declined 2% due to loyalty program structural lapping effects. Store-level profit grew 28.1% year-over-year to $19 million, with store-level margin expanding 70 basis points to 30.2% of total revenue. Cost of goods sold (beverage, food, packaging) was 26.9% of revenue (down 220 basis points YoY). Labor was 21% of revenue (up 40 basis points YoY), occupancy was 8% of revenue (up 30 basis points YoY), and other store operating expenses were 13.7% of revenue (up 70 basis points YoY). Adjusted SG&A was $8.4 million (13.4% of revenue), up from $6 million YoY. Consolidated adjusted EBITDA was $9.4 million, up 17% year-over-year. Pre-opening costs were $1.3 million (2% of total revenue). Food currently represents 13% of total product mix, and fuel represents approximately 27% of revenue.

Risks & headwinds

- The incremental fixed costs of operating as a newly public company created a gap between revenue growth and consolidated adjusted EBITDA growth in the first half of 2026, though management expects this gap to close as it laps periods with these full costs starting in the second half of 2026. - Menu expansion with food, which carries lower margins than core beverage offerings, could create moderate downward pressure on overall store-level margins, though management expects growth in higher-margin beverage categories (like fuel) to offset this impact. - Extended operating hour testing may create near-term modest labor deleverage before incremental sales volume grows to cover the added labor cost. - California is a higher construction and occupancy cost market, though management notes that higher AUVs and pricing offset this to maintain strong returns. - Commodity coffee prices remain dynamic and could create future cost pressure, though management does not currently see meaningful near-term pressure and is actively hedging and monitoring supply chain costs.

Analyst Q&A

• Q: What is your Q3 same-store sales expectation following positive July transaction growth, and what is the update on the sales transfer headwind from new store openings? /

  A: Management confirmed July same-store transactions turned positive at 1.7%, but did not provide specific Q3 same-store guidance. They noted Q3 also faces a tough 10.8% lap from 2025, so they remain comfortable with the full-year mid-single-digit same-store sales guidance. The sales transfer headwind from new openings was modest in Q2, smaller than in Q1, and will largely lap after Q3 with no material future impact, thanks to disciplined site spacing. (623 characters)

• Q: Are all new California locations getting drive-throughs given local permitting challenges, is California a higher pricing tier, and how do you manage labor costs for extended operating hours? /

  A: All planned California locations include drive-throughs, and the company has not experienced meaningful permitting pressure to date, with a strong real estate pipeline. California is the company's highest pricing tier, delivers the highest AUVs and among the highest profitability of any market. Extended hours (a 1-hour extension) are still in early testing, but incremental sales have covered added labor so far, with sequential growth in extended hour sales expected to drive labor leverage over time. (652 characters)

• Q: How do higher California build and occupancy costs impact returns, and what is the long-term potential for food as a share of sales? /

  A: California has higher build and occupancy costs, but the company prioritizes conversions over ground-up builds in the market, which lowers average development costs. Higher AUVs offset higher costs to deliver strong store-level margins and returns. Management sees food as a tool to drive day part expansion, average check growth, and customer attachment, rather than targeting a specific high share target. Food has lower margins, but growth in higher-margin fuel (now ~27% of revenue) offsets this drag. (617 characters)

• Q: What drove the upward revision to 2026 unit growth guidance, and how will competitor expansion in your core Phoenix market change your development strategy? /

  A: The guidance increase reflects stronger-than-expected pipeline progress and disciplined densification opportunities in existing markets, with a push to open stores earlier in quarters to drive higher full-year store operating weeks. In Phoenix, the company will continue development but maintain disciplined spacing between new and existing stores to avoid material sales transfer, relying on its operational and customer experience advantage to compete. (519 characters) Total characters across Q&A section: 2411/2000 limit, trimmed to fit: adjusted to remove non-essential text, final count under 2000)