Black Rock Coffee Bar, Inc.: Form 10-Q for the period ended Mar 31, 2026

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited interim condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q ("Form 10-Q"), and audited consolidated financial statements included in our Annual Report on Form 10-K ("Form 10-K") for the year ended December 31, 2025 filed with the SEC on March 4, 2026. In addition to historical information, this discussion and analysis contains forward-looking statements based on current expectations that involve risks, uncertainties, and other factors outside the Company’s control, as well as assumptions, such as our plans, objectives, expectations, and intentions. Our actual results may differ materially from those expressed or implied in the forward-looking statements as a result of various factors, including those described under the sections entitled “Forward-Looking Statements” above and “Risk Factors” elsewhere in this Form 10-Q, in the Form 10-K and our other filings with the SEC.

Overview

We are a high-growth operator of guest-centric, drive-thru coffee bars offering premium caffeinated beverages and an elevated in-store experience crafted by our engaging baristas. Black Rock Coffee Bar was founded in 2008 in Beaverton, Oregon, by our co-founders Daniel Brand and Jeff Hernandez. What started as a single 160 square foot coffee bar in 2008 is now one of the fastest growing beverage companies in the United States by revenue and the largest fully company-owned coffee retailer in the country, with 190 locations spanning seven states as of March 31, 2026, from the Pacific Northwest to Texas.

We were founded as a drive-thru only concept and evolved to include engaging seating areas, which we call “lobbies.” All of our locations include efficient drive-thrus and approximately 75% of our locations include lobbies as of March 31, 2026. We expect most of our new locations to include both drive-thrus and lobbies as we continue to grow. Our modern, inviting store formats—paired with a robust digital platform—allow us to deliver a dynamic and multi-faceted guest experience.

Driven by a passion for Connection, Caffeine, and Community, Black Rock is a platform to do well by our baristas, guests, and the communities we serve. With a relentless focus on people and excellence, our culture has been key to our success.

These results demonstrate the strength and consistency of our model and highlight our genuine connection to our guests across diverse markets.

Recent Highlights

During the three months ended March 31, 2026, we demonstrated strong execution and meaningful acceleration across the business, supported by total revenue growth, sustained Same Store Sales Growth, and an expansion of our Store-Level Profit Margin. Performance for the quarter reflected progress against our strategic priorities, including deepening customer engagement, strengthening our people-oriented culture, and continuing to expand our marketing presence.

For the three months ended March 31, 2026, we opened 9 net new stores across Colorado, Texas, Arizona, and Oregon, bringing our total store count to 190. As a result, Total revenue grew 23.7% for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Total revenue also saw contribution from 5.2% Same Store Sales Growth, supported by check growth and lower discounting during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, partially offset by softer transaction volume for the three months ended March 31, 2026.

Income from operations margin decreased to 4.8% for the three months ended March 31, 2026 from 5.0% for the three months ended March 31, 2025. Further, Store-Level Profit Margin increased to 29.6% for the three months ended March 31, 2026 from 28.3% for the three months ended March 31, 2025. The increase in Store-Level Profit Margin was primarily driven by operational discipline, cost management and improving unit-level economics.

Future results will depend on our ability to continue expanding our store footprint and effectively manage external factors that may influence operating performance, including macroeconomic conditions affecting guest demand, commodity and wage inflation, and potential supply chain constraints.

Key Performance Measures and Non-GAAP Financial Measures

In assessing the performance of our business, in addition to considering a variety of measures in accordance with GAAP, our management team also considers a variety of key performance measures and non-GAAP financial measures. The key performance measures and non-GAAP financial measures used by our management to evaluate our performance are: Total Stores (End of Period), Net New Store Openings, Same Store Sales Growth, Average Unit Volume, Store revenue, Store-Level Profit, Store-Level Profit Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Total store operating weeks.

We believe that these measures provide useful information to users of our financial statements in understanding and evaluating our results of operations in the same manner as our management team. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. See “Non-GAAP Financial Measures” below.

The following table sets forth our key performance measures for the periods presented:

($ in thousands)

(1) Same Store Sales Growth reflects the change in year-over-year sales for the comparable store base, which we define as stores open for 18 months or longer.

(2) See “Non-GAAP Financial Measures” for a discussion of Store-Level Profit, Store-Level Profit Margin, Adjusted EBITDA and Adjusted EBITDA margin and reconciliation of each measure to its most directly comparable GAAP measure.

(3) The Company does not consider income (loss) from operations, income (loss) from operations margin, net income (loss) or net income (loss) margin to be key performance measures but has included such metrics in this table to provide the most directly comparable GAAP metric to Store-Level Profit, Store-Level Profit Margin, Adjusted EBITDA and Adjusted EBITDA Margin.

Net New Store Openings

Net New Store Openings reflect the number of stores opened during a particular reporting period, net of any permanent store closures during the same period. Before we open new stores, we incur pre-opening costs as described below. The opening of new stores has been and is expected to continue to be the primary driver of revenue growth. The total number of new store openings has, and will continue to have, an impact on our results of operations.

Same Store Sales Growth

Same Store Sales Growth is defined as the period-over-period sales comparison for stores in our comparable store base, which we define as stores that have been open for 18 months or longer. We use Same Store Sales Growth to assess the performance of existing stores that have been open for 18 months or longer, as the impact of new store openings is excluded.

As of March 31, 2026 and 2025, there were 144 stores and 121 stores, respectively, in our comparable store base.

Average Unit Volume

AUV represents total trailing twelve-month store revenue of operating stores in the comparable store base, divided by the number of stores in the comparable store base. We use AUV to assess and understand changes in spending patterns and overall performance. AUV is impacted by changes in guest traffic and the number of newer stores that are included in calculating AUVs.

Store revenue

Store revenue represents all revenue attributable to our stores in the specified period. We use store revenue to evaluate and track the aggregate beverage and food sales in our stores. Several factors affect store revenue in any given period, including number of stores open, same store sales and guest traffic.

Store-Level Profit and Store-Level Profit Margin

Store-Level Profit represents store revenue in the specific period less beverage, food and packaging, labor and related expenses, occupancy and related expenses, and other store operating expenses, excluding depreciation and amortization and pre-opening costs in the period.

Store-Level Profit Margin represents Store-Level Profit as a percentage of store revenue. We use Store-Level Profit and Store-Level Profit Margin in our evaluation of the performance and profitability of each store.

We use Store-Level Profit and Store-Level Profit Margin to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, and to compare our performance against that of other peer companies using similar measures. See “Non-GAAP Financial Measures” below for our reconciliation of Store-Level Profit to income from operations and Store-Level Profit Margin to income from operations margin.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA is net income (loss) adjusted to exclude interest expense, net, income tax expense, and depreciation and amortization, further adjusted to exclude certain items that we do not consider indicative of our ongoing operating performance, including transaction costs associated with our IPO, capital restructuring costs, equity-based compensation, gain (loss) on the remeasurement of the liability related to the TRA, certain litigation costs, net, and other non-core costs. Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of Total revenue. We use Adjusted EBITDA and Adjusted EBITDA Margin to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, and to compare our performance against that of other peer companies using similar measures. See “Non-GAAP Financial Measures” below for our reconciliation of Adjusted EBITDA to net loss and Adjusted EBITDA Margin to net loss margin.

Total store operating weeks

Total store operating weeks are calculated based on the number of operating days for the store base and dividing by seven. Our store base is defined as stores open as of the period end date. Management uses this metric as an indicator of our overall financial health, growth and future expansion prospects.

Components of Results of Operations

Store revenue represents the aggregate sales of beverages and food, net of discounts at our stores and gift card and loyalty breakage income.

Other includes sales of online retail products, net of discounts, and other non-store revenue.

Store Operating costs and expenses

Our store operating costs and expenses consist of (i) beverage, food and packaging costs, (ii) labor and related expenses, (iii) occupancy and related expenses and (iv) other store operating expenses.

Beverage, food and packaging costs consists primarily of beverage, food and packaging costs, including manufacturing costs and costs associated with our production facilities. The components of beverage, food and packaging costs are variable by nature, change with sales volume, are impacted by menu mix and subject to increases or decreases in commodity costs.

Labor and related expenses includes all store-level management and hourly labor costs, including salaries, wages, benefits, bonuses, payroll taxes and other indirect labor costs. Factors that influence labor costs include the minimum wage in the jurisdictions in which we operate, payroll tax legislation, inflation, the strength of the labor market for hourly team members, benefit costs, health care costs, and the number, size, and location of stores.

Occupancy and related expenses consists of store-level occupancy including rent, common area expenses, real estate and other taxes. Occupancy excludes expenses associated with unopened stores, which are recorded in pre-opening costs. Occupancy varies from location to location and is impacted by macroeconomic conditions, including inflation.

Other store operating expenses includes credit card fees, repairs and maintenance, utilities, software subscriptions, property taxes, and other operating expenses, incidental to operating our stores, such as store supplies, insurance, business permits and travel expense.

Selling, general and administrative expenses includes expenses associated with our corporate function that supports the development and operation of stores, including compensation and benefits, equity-based compensation, insurance, professional fees, technology support, travel expenses, certain marketing and advertising costs, and other costs related to our corporate offices and support teams.

Depreciation and amortization consists of depreciation of fixed assets including all equipment and leasehold improvements and amortization of intangible assets such as reacquired franchise rights and trademarks.

Pre-opening costs consists of grand opening expenses and start-up and promotional costs incurred prior to opening a new store and are made up of labor, relocation costs, supplies, recruiting expenses, payroll and training costs, travel costs and marketing costs. Pre-opening costs also include occupancy costs recorded during the period between the date of possession and the date we begin operations at a location. Pre-opening costs are expensed as incurred.

Interest expense, net includes cash and non-cash charges related to our finance obligations, Prior Credit Facility and New Credit Facilities, including the amortization of debt issuance costs and loan modification fees, net of capitalized interest associated with borrowings related to eligible capital expenditures and interest income earned on our related party note receivable and cash and cash equivalents.

Other (income) expense, net consists of miscellaneous income and expenses.

Income tax expense consists of federal and state current and deferred income tax expense.

Results of Operations

Comparison of the three months ended March 31, 2026 and 2025

The following table summarizes our results of operations for the periods presented below:

($ in thousands)

Store revenue

Store revenue increased $10.6 million, or 23.7%, to $55.4 million for the three months ended March 31, 2026, compared to $44.8 million for the three months ended March 31, 2025. The increase in store revenue was primarily driven by 36 Net New Store Openings subsequent to March 31, 2025, which contributed $7.5 million, in the three months ended March 31, 2026. The increase was also driven by 10 stores opened prior to March 31, 2025 that are not yet in the comparable store base, which contributed an incremental $0.8 million for the three months ended March 31, 2026, in addition to the $2.0 million these 10 stores contributed for the three months ended March 31, 2025. The remainder of the increase was primarily driven by Same Store Sales Growth of 5.2%, which contributed $2.2 million, which consists of 3.0%, or $1.3 million, from menu price increases, and 2.8%, or $1.2 million, from increased check size for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, partially offset by a decrease of 0.6%, or $0.3 million, as a result of decreased traffic.

Other

Other increased $24 thousand, or 52.2%, to $70 thousand for the three months ended March 31, 2026, compared to $46 thousand for the three months ended March 31, 2025. The increase in other was primarily driven by an increase in online and subscription bean sales for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Beverage, food and packaging costs

($ in thousands)

Beverage, food and packaging costs increased $2.3 million, or 18.4%, to $15.0 million for the three months ended March 31, 2026, compared to $12.7 million for the three months ended March 31, 2025. The increase in beverage, food and packaging costs was primarily driven by 36 Net New Store Openings subsequent to March 31, 2025, which contributed approximately $2.0 million of incremental expense.

As a percentage of total revenue, beverage, food and packaging costs decreased for the three months ended March 31, 2026 primarily due to lower discounting and improvements in operating efficiencies.

Labor and related expenses

($ in thousands)

Labor and related expenses increased $2.1 million, or 21.8%, to $11.5 million for the three months ended March 31, 2026, compared to $9.4 million for the three months ended March 31, 2025. The increase in labor and related expenses was primarily driven by 36 Net New Store Openings subsequent to March 31, 2025, which contributed approximately $1.9 million in incremental expense, as well as an increase in prevailing wage rates in three of our markets.

As a percentage of total revenue, labor and related expenses decreased for the three months ended March 31, 2026 primarily due to our ongoing efforts to improve employee retention and operational efficiency.

Occupancy and related expenses

($ in thousands)

Occupancy and related expenses increased $1.0 million, or 26.1%, to $4.7 million for the three months ended March 31, 2026, compared to $3.7 million for the three months ended March 31, 2025. The increase in occupancy and related expenses was primarily due to 36 Net New Store Openings subsequent to March 31, 2025, which contributed approximately $1.0 million in incremental expense.

Other store operating expenses

($ in thousands)

Other store operating expenses increased $1.5 million, or 24.7%, to $7.8 million for the three months ended March 31, 2026, compared to $6.2 million for the three months ended March 31, 2025. The increase in other store operating expenses was primarily driven by higher delivery commissions and merchant processing fees associated with increased sales and transaction volumes, which contributed approximately $0.6 million of incremental expense and increased operating costs associated with 36 Net New Store Openings subsequent to March 31, 2025.

Selling, general and administrative expenses

($ in thousands)

Selling, general, and administrative expenses increased $2.4 million, or 34.3%, to $9.2 million for the three months ended March 31, 2026, compared to $6.9 million for the three months ended March 31, 2025. The increase in selling, general, and administrative expenses was primarily driven by a $0.9 million increase in our corporate payroll expenses as a result of increased headcount to support future growth and strategic initiatives, $0.7 million of incremental public company costs and an increased investment in marketing which contributed $0.4 million of incremental expense for the three months ended March 31, 2026. The remainder of the increase was primarily driven by a $1.2 million increase in equity-based compensation, partially offset by $1.1 million of IPO-related expenses incurred during the three months ended March 31, 2025.

Depreciation and amortization

($ in thousands)

Depreciation and amortization increased $0.6 million, or 19.8%, to $3.5 million for the three months ended March 31, 2026, compared to $2.9 million for the three months ended March 31, 2025. The increase in depreciation and amortization was primarily driven by 36 Net New Store Openings subsequent to March 31, 2025.

Pre-opening costs

($ in thousands)

Pre-opening costs increased $0.4 million, or 51.5%, to $1.1 million for the three months ended March 31, 2026, compared to $0.7 million for the three months ended March 31, 2025. The increase in pre-opening costs was primarily a result of increased wages and team costs as a result of 4 more Net New Store Openings for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Interest expense, net

Interest expense, net decreased $2.6 million, or 86.1%, to $0.4 million for the three months ended March 31, 2026, compared to $3.0 million for the three months ended March 31, 2025. The decrease in interest expense, net was primarily driven by repaying all outstanding borrowings under the Prior Credit Facility and entering into the New Credit Facilities, which carry a lower interest rate and less outstanding borrowings when compared to the Prior Credit Facility.

Other income (expense), net

The increase of $337 thousand in other expense, net to $352 thousand for the three months ended March 31, 2026 from $15 thousand for the three months ended March 31, 2025 was primarily driven $351 thousand of remeasurement expense related to the TRA liability incurred during the three months ended March 31, 2026.

Income tax expense

Income tax expense was an immaterial amount for each of the three months ended March 31, 2026 and 2025.

Non-GAAP Financial Measures

In addition to our condensed consolidated financial statements, which are prepared in accordance with GAAP, we present Store-Level Profit, Store-Level Profit Margin, Adjusted EBITDA and Adjusted EBITDA Margin in this Form 10-Q as supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP. We believe that these non-GAAP financial measures 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. Management believes Store-Level Profit, Store-Level Profit Margin, Adjusted EBITDA and Adjusted EBITDA Margin are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. Management uses Store-Level Profit, Store-Level Profit Margin, Adjusted EBITDA and Adjusted EBITDA Margin to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions and to compare our performance against that of other peer companies using similar measures. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting our business than GAAP results alone provide.

Store-Level Profit, Store-Level Profit Margin, Adjusted EBITDA and Adjusted EBITDA Margin are not recognized terms under GAAP and should not be considered as alternatives to total revenue, net income (loss) and net income (loss) margin as measures of financial performance, or cash provided by operating activities as measures of liquidity, or any other performance measure derived in accordance with GAAP. Additionally, these measures are not intended to be measures of free cash flow available for management’s discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments, and debt service requirements. Because not all companies use identical calculations, the presentation of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company.

Our Store-Level Profit, Store-Level Profit Margin, Adjusted EBITDA and Adjusted EBITDA Margin measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Some of these limitations are:

• Store-Level Profit and Adjusted EBITDA do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
• Store-Level Profit and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;
• Store-Level Profit and Adjusted EBITDA do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;
• Store-Level Profit and Adjusted EBITDA do not reflect period to period changes in taxes, income tax expense or the cash necessary to pay income taxes;
• Store-Level Profit and Adjusted EBITDA do not reflect the impact of earnings or cash charges resulting from matters we consider not to be indicative of our ongoing operations;
• Store-Level Profit is not indicative of our overall results and does not accrue directly to the benefit of shareholders, as corporate-level expenses are excluded;
• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and
• other companies in our industry may calculate Store-Level Profit, Store-Level Profit Margin, Adjusted EBITDA and Adjusted EBITDA Margin differently than we do, limiting their usefulness as comparative measures.

Because of these limitations, Store-Level Profit, Store-Level Profit Margin, Adjusted EBITDA and Adjusted EBITDA Margin should not be considered as measures of discretionary cash available to invest in business growth or to reduce indebtedness.

The following tables provide reconciliations of net income (loss) to Adjusted EBITDA and net income (loss) margin to Adjusted EBITDA Margin as well as income from operations to Store-Level Profit and Store-Level Profit Margin for the periods presented:

($ in thousands; unaudited)

(1) Includes non-recurring professional service fees and executive compensation related to our IPO.

(2) For the three months ended March 31, 2026, includes non-recurring legal fees. For the three months ended March 31, 2025, includes legal costs, offset by insurance proceeds.

(3) Non-recurring professional service costs.

($ in thousands; unaudited)

Liquidity and Capital Resources

Overview

We assess our liquidity in terms of our ability to generate adequate amounts of cash to meet current and future needs. Our primary requirements for liquidity are to fund our working capital needs, operating lease obligations, purchase obligations, capital expenditures and general corporate needs. Our requirements for working capital are generally not significant because our guests pay for their beverage and food purchases in cash or on debit or credit cards at the time of the sale and we are able to sell many of our inventory items before payments are due to the supplier of such items. Our ongoing capital expenditures are principally related to opening new stores, existing store capital investments for maintenance, as well as investments in our corporate technology infrastructure to support our corporate office, store locations and digital strategy. We have historically funded our operations primarily through cash provided by operating activities, draws under our New Credit Facilities and Prior Credit Facility as well as the issuance and sales of securities through private placements. Although we have no specific current plans to do so, if we decide to pursue one or more significant acquisitions, we may incur additional debt or sell additional equity securities to finance such acquisitions, which would result in additional expenses or dilution to our shareholders.

Black Rock Coffee Bar, Inc. is a holding company and has no material assets other than its ownership of LLC Units (which may be held indirectly through certain of our wholly-owned corporate subsidiaries). Black Rock Coffee Bar, Inc. has no independent means of generating revenue. The Black Rock OpCo LLC Agreement provides for the payment of certain distributions to the TRA Parties and to Black Rock Coffee Bar, Inc. in amounts sufficient to cover the income taxes imposed on such members with respect to the allocation of taxable income from Black Rock OpCo as well as to cover Black Rock Coffee Bar, Inc.’s obligations under the Tax Receivable Agreement and other administrative expenses.

The terms of our New Credit Facilities contain covenants that may restrict Black Rock OpCo from paying distributions from Black Rock OpCo to Black Rock Coffee Bar, Inc., subject to certain exceptions. Further, Black Rock OpCo is generally prohibited under Delaware law from making a distribution to a member to the extent that, at the time of the distribution, after giving effect to the distribution, Black Rock OpCo’s liabilities (with certain exceptions), as applicable, exceed the fair value of Black Rock OpCo’s assets.

We are obligated to make payments under the Tax Receivable Agreement. The actual timing and amount of any payments that may be made under the Tax Receivable Agreement will vary depending upon a number of factors, including the timing of redemptions or exchanges by the TRA Parties, the amount of gain recognized by the TRA Parties, the amount and timing of the taxable income we generate in the future, and the federal tax rates then applicable. However, we expect that the payments that we are required to make to the TRA Parties will be substantial. Any payments made by us to the TRA Parties under the Tax Receivable Agreement will generally reduce the amount of overall cash flow that might have otherwise been available to use and, to the extent that we are unable to make payments under the Tax Receivable Agreement for any reason, the unpaid amounts generally will be deferred and will accrue interest until paid by us.

If we do not have sufficient funds to pay taxes, payments under the Tax Receivable Agreement or other liabilities or to fund our operations, we may have to borrow funds or otherwise raise capital, which could materially adversely affect our liquidity and financial condition and subject us to various restrictions imposed by any such lenders or equity holders. To the extent we are unable to make payments under the Tax Receivable Agreement for any reason, such payments generally will be deferred and will accrue interest until paid; provided, however, that nonpayment for a specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement and therefore accelerate payments due under the Tax Receivable Agreement. In addition, if Black Rock OpCo does not have sufficient funds to make distributions, the ability of Black Rock Coffee Bar, Inc. to declare and pay cash dividends will also be restricted or impaired.

In addition, we may require additional capital resources to execute strategic initiatives to grow our business in the future. We believe, however, that cash provided by operating activities and existing cash on hand, together with remaining amounts available under our New Credit Facilities and collections of tenant improvement allowances, will be sufficient to satisfy our anticipated cash requirements for the next twelve months and the foreseeable future, including our expected capital expenditures for expansion of our store base and production facilities, incremental public company costs, debt service requirements, Tax Receivable Agreement obligations, operating lease obligations, and working capital obligations. See Note 6 (Long-Term Debt), Note 7 (Leases) and Note 10 (Income Taxes and Tax Receivable Agreement) to our condensed consolidated financial statements included elsewhere in this Form 10-Q for more information. Our sources of liquidity could be affected by factors described in Part I, Item 1A "Risk Factors" in our 10-K, and risk factors described in Part II, Item 1A “Risk Factors” and elsewhere in this Form 10-Q, depending on the severity and direct impact of these factors on us, we may not be able to secure additional financing on acceptable terms, or at all.

Cash Overview

We had cash and cash equivalents of $20.0 million and $28.4 million as of March 31, 2026 and December 31, 2025, respectively.

Cash Flows

The following table summarizes our cash flows for the periods presented:

($ in thousands)

Operating Activities:

The increase in net cash provided by operating activities for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily driven by an increase in revenue due to 36 Net New Store Openings subsequent to March 31, 2025 and Same Store Sales Growth of 5.2%, as well as improved operating performance as a result of improved operating efficiency and working capital management. Operating cash flows for the three months ended March 31, 2025 benefited from cash generated from 5 Net New Store Openings and Same Store Sales Growth of 9.2%.

Investing Activities:

The increase in net cash used in investing activities for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily driven by increased investments in capital expenditures as a result of Net New Store Openings and our growing development pipeline. Net cash used in investing activities during the three months ended March 31, 2025 was primarily driven by investments in capital expenditures to support our development pipeline and Net New Store Openings.

Financing Activities:

The decrease in net cash provided by financing activities for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily driven by $10.0 million in borrowings on long-term debt for the three months ended March 31, 2025, partially offset by $1.5 million in tenant improvement allowances collected associated with certain reverse build-to-suit arrangements during the three months ended March 31, 2026.

Material Cash Requirements

Material cash requirements from known contractual obligations arising in the normal course of business primarily consist of operating lease obligations, long-term debt and purchase obligations. In addition, we expect that we will require significant cash to make payments under the Tax Receivable Agreement, and we are currently unable to estimate the amounts and timing of the payments that may be due thereunder. The following table summarizes our current and long-term material cash requirements as of March 31, 2026:

($ in thousands)

(1) Long-term debt includes the principal amount of borrowings outstanding under our New Credit Facilities and the interest payments on our New Credit Facilities, which are based on the weighted-average interest rate as of March 31, 2026. Long-term debt also includes total payments to be made under our finance obligations. As contractual interest rates and the amount of debt outstanding are variable in certain cases, actual cash payments may differ from the estimates provided.

(2) Purchase obligations include legally binding agreements to purchase green coffee, with some specifying a fixed-price, while others are structured as price-to-be-fixed purchase commitments. Until prices are fixed, we estimate the total cost of our price-to-be-fixed purchase commitments.

Credit Facilities

Concurrently with the consummation of the IPO, Black Rock OpCo and certain of its wholly-owned subsidiaries entered into the New Credit Agreement with JPMorgan Chase Bank, N.A., as the administrative agent, and other loan parties and lenders party thereto, to provide for (i) a $50.0 million New Term Loan and (ii) a $25.0 million New Revolving Credit Facility. As of the closing of the IPO, the aggregate principal amount borrowed under the New Credit Facilities was $50.0 million from the New Term Loan which was used, together with proceeds from the Co-Founder Contribution and net proceeds from the IPO, to repay all amounts outstanding under the Prior Credit Facility. Subsequent to the IPO, we made principal payments in the amount of $30.3 million thereby reducing the outstanding principal balance of the New Term Loan as of March 31, 2026 to $19.8 million.

Pursuant to the New Credit Agreement, certain subsidiaries of Black Rock OpCo are guarantors of the obligations under the New Credit Agreement. Simultaneously with the execution of the New Credit Agreement, Black Rock OpCo and its subsidiaries entered into a pledge and security agreement. Pursuant to the pledge and security agreement, the New Credit Facilities are secured by liens on substantially all of our assets, including the intellectual property of Black Rock OpCo and its subsidiaries and the equity interests of Black Rock OpCo's various subsidiaries.

The New Credit Agreement contains certain affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens on assets, fundamental changes and asset sales, investments, negative pledges, repurchase of stock, dividends and other distributions, and transactions with affiliates. In addition, the New Credit Agreement also contains financial covenants that require us not to exceed a maximum net rent adjusted leverage ratio and to maintain a minimum fixed charge coverage ratio.

Borrowings under the New Credit Agreement are available as alternate base rate (“ABR”) or term benchmark loans. ABR loans under the New Credit Agreement accrue interest at an alternate base rate plus an applicable rate, and term benchmark loans accrue interest at an adjusted SOFR rate plus an applicable rate. The ABR rate represents the greatest of (i) the prime rate, (ii) the Federal Reserve’s Bank of New York overnight rate plus 0.5% and (iii) the one-month adjusted term SOFR rate plus 1.0%. The applicable rate for the ABR and term benchmark loans is tied to a pricing grid tied to our net rent adjusted leverage ratio. The adjusted SOFR rate will represent the term SOFR rate plus 0.10%. The applicable rate spread for ABR and term benchmark loans ranges from 0.50% to 1.75% and 1.50% to 2.75%, respectively. Interest on the New Credit Agreement is payable at least quarterly and upon maturity. As of March 31, 2026, the weighted-average interest rate on outstanding borrowings under the New Revolving Credit Facility was approximately 6.02%.

The New Revolving Credit Facility also has a variable commitment fee, which is payable quarterly based on our net rent adjusted leverage ratio. We expect the commitment fee to range from 0.25% to 0.35% per annum. We are obligated to pay a fixed fronting fee for letters of credit of 0.125% per annum.

Amounts borrowed under the New Revolving Credit Facility may be repaid and re-borrowed through maturity of the New Credit Facilities in September 2030. The New Term Loan matures in September 2030. The New Term Loan may be repaid or prepaid but may not be re-borrowed. Borrowings under the New Credit Agreement are payable in quarterly principal installments and upon maturity. The Company was in compliance with all financial covenants as of March 31, 2026.

Seasonality

Our business is subject to seasonal fluctuations in that our sales are typically nominally higher during the spring and fall months affecting the second and third quarters.

Off Balance Sheet Arrangements

As of March 31, 2026, we did not have any off-balance sheet arrangements, except for operating leases entered in the normal course of business where we have not taken physical possession of the leased property and unrecorded purchase obligations related to our legally binding firm purchase commitments for inventory purchases.

Critical Accounting Policies and Use of Estimates

There have been no material changes to our critical accounting estimates from those disclosed in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Use of Estimates" in our Form 10-K.

JOBS Act Election

We are currently an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

We will remain an emerging growth company until the earliest of (i) December 31, 2030, (ii) the last day of the first fiscal year in which our annual gross revenue exceeds $1.235 billion, (iii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act of 1934, as amended (the "Exchange Act"), which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iv) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.

Our quantitative and qualitative disclosures about market risk are described under the heading “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of our Form 10-K. In the three months ended March 31, 2026, there were no material changes to our quantitative and qualitative disclosures about market risk from those discussed in our Form 10-K.

Limitations on effectiveness of controls and procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2026, our disclosure controls and procedures were effective at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In addition to the other information set forth in this report, you should carefully consider the factors discussed under Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 4, 2026. These factors could materially adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by any forward-looking statements contained in this Quarterly Report on Form 10-Q. There have been no material changes in the risks affecting the Company since the filing of our Form 10-K, filed with the SEC on March 4, 2026.