Black Rock Coffee Bar Inc.

03/04/2026 | Press release | Distributed by Public on 03/04/2026 05:09

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the related notes included elsewhere in this Form 10-K. 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 our 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-K and our other filings with the SEC. A discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023 has been reported previously in our final prospectus dated September 11, 2025 filed with the SEC on September 15, 2025 pursuant to Rule 424(b)(4) (File No. 333-289685) of the Securities Act (the "Prospectus"), under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations."
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 181locations spanning seven states as of December 31, 2025, 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 73% of our locations include lobbies as of December 31, 2025. 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.
Initial Public Offering and Related Transactions
Black Rock Coffee Bar, Inc. was originally incorporated as a Delaware corporation on May 2, 2025 and in June 2025 re-domiciled to be incorporated in Texas for the purposes of facilitating an initial public offering. On September 15, 2025, we completed our IPO in which we issued and sold 16,911,764 shares of Class A common stock (including 2,205,882 shares sold pursuant to the full exercise of the underwriters option to purchase additional shares) at an offering price of $20.00 per share, resulting in net proceeds of approximately $306.5 million after deducting underwriting discounts, commissions and offering expenses. We used the net proceeds from the IPO to: (i) purchase 3,857,642 newly issued LLC Units for approximately $71.8 million directly from Black Rock OpCo; and (ii) purchase 13,054,122 LLC Units from certain Continuing Equity Owners for approximately $242.8 million, each at a price per unit equal to the IPO price per share of Class A common stock less the underwriting discount.
For additional information related to our IPO and the Transactions, see "The Transactions" in the forepart of this Form 10-K, "-Liquidity and Capital Resources-IPO and Related Transactions" in this Part II, Item 7 as well as Note 1, Note 7 and Note 9 to the consolidated financial statements elsewhere in this Form 10-K.
Recent Highlights
During the year ended December 31, 2025, 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 year reflected progress against our strategic priorities, including driving sales through menu innovation and supporting operational execution across our stores.
For the year ended December 31, 2025, we met our stated target of at least 20% new unit growth, opening 32 net new stores, which broadened our presence in existing growth markets. As a result, Total revenue grew 24.5% for the year ended December 31, 2025, compared to the year ended December 31, 2024. Total revenue also saw significant contribution from 10.1% Same Store Sales Growth, supported by healthy traffic and strong guest engagement.
Income from operations margin decreased to 0.4% for the year ended December 31, 2025 from 3.7% for the year ended December 31, 2024. Further, Store-Level Profit Margin increased to 29.2% for the year ended December 31, 2025 from 27.9% for the year ended December 31, 2024. 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. Following changes to how management evaluates the business and our performance, we have added the new key performance measure of Total store operating weeks beginning with this Annual Report.
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:
Year Ended December 31,
($ in thousands) 2025 2024 Change
Total Stores (End of Period) 181 149 32
Net New Store Openings 32 24 8
Same Store Sales Growth(1)
10.1 % 6.3 % 3.8 %
Average Unit Volume $ 1,286 $ 1,186 $ 100
Store revenue $ 200,086 $ 160,682 $ 39,404
Income from operations(3)
$ 901 $ 6,033 $ (5,132)
Income from operations margin(3)
0.4 % 3.7 % (3.3) %
Store-Level Profit(2)
$ 58,492 $ 44,780 $ 13,712
Store-Level Profit Margin(2)
29.2 % 27.9 % 1.3 %
Net loss(3)
$ (16,539) $ (7,187) $ (9,352)
Net loss margin(3)
(8.3) % (4.5) % (3.8) %
Adjusted EBITDA(2)
$ 27,500 $ 20,194 $ 7,306
Adjusted EBITDA Margin(2)
13.7 % 12.5 % 1.2 %
Total store operating weeks 8,319 7,187 1,132
(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 loss or net 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 December 31, 2025 and 2024, there were 137 stores and 115 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 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, point-of-sale system transition costs 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 7. Our store base is defined as stores opened 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 revenuerepresents 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 costsconsists 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 expensesincludes 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 expensesconsists 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 expensesincludes 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 expensesincludes 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 amortizationconsists 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 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, netconsists of miscellaneous income and expenses.
Income tax expenseconsists of federal and state current and deferred income tax expense.
Results of Operations
Comparison of the years ended December 31, 2025 and 2024
The following table summarizes our results of operations for the periods presented below:
Year Ended December 31, Change
($ in thousands) 2025 2024 $ %
Store revenue $ 200,086 $ 160,682 $ 39,404 24.5 %
Other 235 235 - - %
Total revenue 200,321 160,917 39,404 24.5 %
Store operating costs and expenses (exclusive of depreciation and amortization presented separately below):
Beverage, food and packaging costs 56,323 46,491 9,832 21.1 %
Labor and related expenses 42,006 35,132 6,874 19.6 %
Occupancy and related expenses 16,087 13,107 2,980 22.7 %
Other store operating expenses 27,178 21,172 6,006 28.4 %
Total store operating costs and expenses 141,594 115,902 25,692 22.2 %
Selling, general and administrative expenses 41,324 25,261 16,063 63.6 %
Depreciation and amortization 12,199 10,364 1,835 17.7 %
Pre-opening costs 4,303 3,357 946 28.2 %
Total operating expenses 199,420 154,884 44,536 28.8 %
Income from operations 901 6,033 (5,132) (85.1) %
Interest expense, net (9,350) (11,115) 1,765 (15.9) %
Other income (expense), net (7,615) (1,835) (5,780) 315.0 %
Loss before income taxes (16,064) (6,917) (9,147) 132.2 %
Income tax expense 475 270 205 75.9 %
Net loss $ (16,539) $ (7,187) $ (9,352) 130.1 %
Store revenue
Store revenue increased $39.4 million,or 24.5%, to $200.1 million for the year ended December 31, 2025, compared to $160.7 million for the year ended December 31, 2024. The increase in store revenue was primarily driven by 32 Net New Store Openings during the year ended December 31, 2025, which contributed $11.9 million, as well as 12 stores opened during the six month period ended December 31, 2024 that are not yet in the comparable store base, which contributed an incremental $9.4 million for the year ended December 31, 2025, in addition to the $2.8 million these 12 stores contributed for the year ended December 31, 2024. The remainder of the increase was primarily driven by Same Store Sales Growth of 10.1%, which contributed $15.0 million, which consists of 4.5%, or $6.7 million, from menu price increases and product mix, and 6.7%, or $10.0 million, from increased traffic, partially offset by a decrease of 1.2%, or $1.7 million, as a result of higher discounting for the year ended December 31, 2025, compared to the year ended December 31, 2024.
Other
Other remained flat for the year ended December 31, 2025 compared to the year ended December 31, 2024.
Beverage, food and packaging costs
Year Ended December 31, Change
($ in thousands) 2025 2024 $ %
Beverage, food and packaging costs $ 56,323 $ 46,491 $ 9,832 21.1 %
As a percentage of Total revenue 28.1 % 28.9 % n/a (0.8) %
Beverage, food and packaging costs increased $9.8 million, or 21.1%, to $56.3 million for the year ended December 31, 2025, compared to $46.5 million for the year ended December 31, 2024. The increase in beverage, food and packaging costs was primarily driven by 32 Net New Store Openings during the year ended December 31, 2025, which contributed approximately $3.2 million of incremental expense, 12 stores opened during the six month period ended December 31, 2024 that are not yet in the comparable store base, which contributed approximately $2.8 million of incremental expense, as well as increased traffic at stores in the comparable store base.
As a percentage of total revenue, beverage, food and packaging costs decreased for the year ended December 31, 2025primarily due to improvements in operating efficiencies, menu price increases, and volume pricing efficiencies driven by greater economies of scale as we continued to expand our store footprint.
Labor and related expenses
Year Ended December 31, Change
($ in thousands) 2025 2024 $ %
Labor and related expenses $ 42,006 $ 35,132 $ 6,874 19.6 %
As a percentage of Total revenue 21.0 % 21.8 % n/a (0.8) %
Labor and related expenses increased $6.9 million, or 19.6%, to $42.0 millionfor the year ended December 31, 2025, compared to $35.1 million for the yearended December 31, 2024. The increase in labor and related expenses was primarily driven by 32Net New Store Openings during the year ended December 31, 2025, which contributed approximately $2.9 millionof incremental expense, 12 stores opened during the six month period ended December 31, 2024 that are not yet in the comparable store base, which contributed approximately $2.0 million of incremental expense,as well as an increase in prevailing wage rates in many of our markets and increased traffic at stores in the comparable store base.
As a percentage of total revenue, labor and related expenses decreased for the year ended December 31, 2025primarily due to operational efficiency, ongoing efforts to improve employee retention and menu price increases to offset increases in prevailing wage rates.
Occupancy and related expenses
Year Ended December 31, Change
($ in thousands) 2025 2024 $ %
Occupancy and related expenses $ 16,087 $ 13,107 $ 2,980 22.7 %
As a percentage of Total revenue 8.0 % 8.1 % n/a (0.1) %
Occupancy and related expenses increased $3.0 million, or 22.7%, to $16.1 million for the year ended December 31, 2025, compared to $13.1 million for the year ended December 31, 2024. The increase in occupancy and related expenses was primarily due to 32 Net New Store Openings during the year ended December 31, 2025, which contributed approximately $1.5 million in incremental expense.
Other store operating expenses
Year Ended December 31, Change
($ in thousands) 2025 2024 $ %
Other store operating expenses $ 27,178 $ 21,172 $ 6,006 28.4 %
As a percentage of Total revenue 13.6 % 13.2 % n/a 0.4 %
Other store operating expenses increased $6.0 million, or 28.4%, to $27.2 million for the year ended December 31, 2025, compared to $21.2 million for the year ended December 31, 2024. 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 $2.6 million of incremental expense, an increase in repairs and maintenance which contributed approximately $1.0 million of incremental expense, and increased operating costs associated with 32 Net New Store Openings subsequent to December 31, 2024.
Selling, general and administrative expenses
Year Ended December 31, Change
($ in thousands) 2025 2024 $ %
Selling, general and administrative expenses $ 41,324 $ 25,261 $ 16,063 63.6 %
As a percentage of Total revenue 20.6 % 15.7 % n/a 4.9 %
Selling, general, and administrative expenses increased $16.1 million, or 63.6%, to $41.3 million for the yearended December 31, 2025, compared to $25.3 million for the year ended December 31, 2024. The increase in selling, general, and administrative expenses was primarily driven by $11.6 million of IPO-related expenses. The remainder of the increase was primarily driven by a $1.9 million increase in our corporate payroll expenses to support future growth and strategic initiatives, and a $2.1 million increase in equity-based compensation.
Depreciation and amortization
Year Ended December 31, Change
($ in thousands) 2025 2024 $ %
Depreciation and amortization $ 12,199 $ 10,364 $ 1,835 17.7 %
As a percentage of Total revenue 6.1 % 6.4 % n/a (0.3) %
Depreciation and amortization increased $1.8 million, or 17.7%, to $12.2 millionfor the year ended December 31, 2025, compared to $10.4 million for the year ended December 31, 2024. The increase in depreciation and amortization was primarily driven by 32Net New Store Openings during the year ended December 31, 2025.
Pre-opening costs
Year Ended December 31, Change
($ in thousands) 2025 2024 $ %
Pre-opening costs $ 4,303 $ 3,357 $ 946 28.2 %
As a percentage of Total revenue 2.1 % 2.1 % n/a - %
Pre-opening costs increased $0.9 million, or 28.2%, to $4.3 million for the year ended December 31, 2025, compared to $3.4 million for the year ended December 31, 2024. The increase in pre-opening costs was primarily driven by a $0.6 million increase in single lease cost related to unopened stores.
Interest expense, net
Interest expense, net decreased $1.8 million, or 15.9%, to $9.4 million for the year ended December 31, 2025, compared to $11.1 million for the year ended December 31, 2024. 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
Other income (expense), net increased to $7.6 million for the year ended December 31, 2025 from $1.8 million for the year ended December 31, 2024. The increase was primarily driven by $5.3 million in expense incurred in connection with the forgiveness of our related party note receivable and a $1.6 million debt extinguishment charge incurred during the year ended December 31, 2025.
Income tax expense
Income tax expense was an immaterial amount for each of the years ended December 31, 2025 and 2024.
Non-GAAP Financial Measures
In addition to our 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-K 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 loss to Adjusted EBITDA and net 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:
Year Ended December 31,
($ in thousands; unaudited) 2025 2024
Net loss $ (16,539) $ (7,187)
Non-GAAP Adjustments:
Interest expense, net 9,350 11,115
Income tax expense 475 270
Depreciation and amortization 12,199 10,364
Transaction costs(1)
11,641 3,725
Capital restructuring costs(2)
7,937 1,771
Equity-based compensation 2,081 -
TRA remeasurements (334) -
Legal settlement, net(3)
149 (831)
Point-of-sale system transition costs - 579
Other costs(4)
541 388
Adjusted EBITDA $ 27,500 $ 20,194
Net loss margin (8.3) % (4.5) %
Adjusted EBITDA Margin 13.7 % 12.5 %
(1)Includes non-recurring professional service fees and executive compensation related to our IPO.
(2)For the year ended December 31, 2025, includes the forgiveness of our related party note receivable (refer to Note 16 in the audited consolidated financial statements included elsewhere in this Form 10-K), a debt extinguishment charge related to the payoff of our Prior Credit Facility and fees incurred related to the Series A Redemption Agreement.
(3)For the year ended December 31, 2025, includes non-recurring legal costs, offset by insurance proceeds. For the year ended December 31, 2024, includes legal costs, offset by insurance proceeds, stemming from the Roasters settlement (refer to Note 5 in the audited consolidated financial statements included elsewhere in this Form 10-K), along with other non-recurring legal fees.
(4)Non-recurring professional service and legal costs.
Year Ended December 31,
($ in thousands; unaudited) 2025 2024
Income from operations $ 901 $ 6,033
Other (235) (235)
Selling, general and administrative expenses 41,324 25,261
Depreciation and amortization 12,199 10,364
Pre-opening costs 4,303 3,357
Store-Level Profit $ 58,492 $ 44,780
Income from operations margin 0.4 % 3.7 %
Store-Level Profit Margin 29.2 % 27.9 %
Liquidity and Capital Resources
IPO and Related Transactions
On September 15, 2025, in connection with the close of our IPO, we issued and sold 16,911,764 shares of our Class A common stock at a price to the public of $20.00 per share, resulting in gross proceeds to us of approximately $338.2 million and net proceeds to us of approximately $314.6 million, after deducting the underwriting discount of approximately $23.7 million. We used net proceeds from the IPO to: (i) purchase 3,857,642 newly issued LLC Units for approximately $71.8 million directly from Black Rock OpCo at a price per unit equal to the IPO price of Class A common stock less the underwriting discount; and (ii) purchase 13,054,122 LLC Units from certain Continuing Equity Owners for approximately $242.8 million at a price per unit equal to the IPO price per share of Class A common stock less the underwriting discount. Concurrently with the IPO, an affiliate of our Co-Founders purchased 3,118,938 newly issued LLC Units from Black Rock OpCo for approximately $62.4 million at a price per unit equal to $20.00 per share (the "IPO price"). Following the IPO and related Transactions, we own a 65.0% interest in Black Rock OpCo.
In connection with our IPO, we undertook certain organizational transactions as described in the prelude to this Form 10-K under "The Transactions". Following the Transactions, we are a holding company and our sole material asset is our equity interest in Black Rock OpCo, which, through its direct and indirect subsidiaries, conducts all of our operations. Because Black Rock Coffee Bar, Inc. is the sole managing member of Black Rock OpCo, we indirectly operate and control all of the business and affairs (and consolidate the financial results) of Black Rock OpCo and its subsidiaries. In addition, we completed a series of reorganization transactions, including: (i) the seventh amendment and restatement of the Black Rock OpCo LLC Agreement to, among other things, effect a recapitalization in which all existing ownership interests in Black Rock OpCo are converted into one class of LLC Units; (ii) the amendment and restatement of the Black Rock Coffee Bar, Inc. certificate of formation to, among other things, authorize three classes of common stock; (iii) Black Rock Coffee Bar, Inc.'s acquisition of common units held by the Blocker Companies; and (iv) Black Rock Coffee Bar, Inc.'s designation as managing member of Black Rock OpCo.
Concurrently with the closing of the IPO, Black Rock OpCo 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. Subsequent to the IPO, we made principal payments in the amount of $30.1 million thereby reducing the outstanding principal balance of the New Term Loan as of December 31, 2025 to $19.9 million.
Immediately following the consummation of the IPO, an affiliate of our Co-Founders purchased 3,118,938 newly issued LLC Units from Black Rock OpCo (and corresponding shares of our Class C common stock) for approximately $62.4 million at the IPO price.
Black Rock OpCo used or intends to use the net proceeds from the sale of its LLC Units in connection with the IPO, together with proceeds from the Refinancing and Co-Founder Contribution to: (i) repay approximately $113.2 million of borrowings outstanding under our Prior Credit Facility, (ii) to pay $8.0 million of non-underwriting offering expenses, and (iii) use the remainder for general corporate purposes.
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, 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 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 equityholders. 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, 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 7 (Long-Term Debt), Note 8 (Leases) and Note 12 (Income Taxes and Tax Receivable Agreement) to our consolidated financial statements included elsewhere in this Form 10-K for more information. Our sources of liquidity could be affected by factors described in Part I, Item 1A. "Risk Factors" and, 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 $28.4 million and $10.2 million as of December 31, 2025 and December 31, 2024, respectively.
Cash Flows
The following table summarizes our cash flows for the periods presented:
Year Ended December 31, Change
Summary of Cash Flows 2025 2024 $ %
($ in thousands)
Net cash provided by operating activities $ 2,189 $ 13,305 $ (11,116) (83.5) %
Net cash used in investing activities (35,315) (22,921) (12,394) 54.1 %
Net cash provided by financing activities 51,305 2,643 48,662 1841.2 %
Net increase (decrease) in cash and cash equivalents $ 18,179 $ (6,973) $ 25,152 (360.7) %
Operating Activities:
The decrease in net cash provided by operating activities for the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily driven by $17.4 million of IPO-related expenses paid during the year ended December 31, 2025, partially offset by an increase in revenue due to 32 Net New Store Openings during the year ended December 31, 2025, incremental revenue generated from 12 stores opened prior to December 31, 2024 that are not yet in the comparable store base and Same Store Sales Growth of 10.1%, as well as improved operating performance as a result of improved labor efficiency and working capital management.
Investing Activities:
The increase in net cash used in investing activities for the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily driven by increased investments in capital expenditures as a result of Net New Store Openings and our growing development pipeline.
Financing Activities:
The increase in net cash provided by financing activities for the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily driven by net proceeds received from our IPO, new borrowings under the New Credit Facilities and the Co-Founder Contributions, partially offset by purchasing LLC Units from the Continuing Equity Owners, repaying all outstanding borrowings under the Prior Credit Facility and the $30.1 million principal payments on the New Credit Facilities.
Material Cash Requirements
Material cash requirements from known contractual obligations arising in the normal course of business primarily consist of operating lease obligations and long-term debt. In addition, we expect that we will require significant cash to make payments under the Tax Receivable Agreement, and we are currently unable to estimate the amounts and timing of the payments that may be due thereunder. The following table summarizes our current and long-term material cash requirements as of December 31, 2025:
Payments Due by Period
($ in thousands) Total 2026 2027-2028 2029-2030 2031 and thereafter
Operating leases $ 195,172 $ 16,902 $ 35,436 $ 33,200 $ 109,634
Long-term debt(1)
41,367 3,061 6,879 21,519 9,908
Total $ 236,539 $ 19,963 $ 42,315 $ 54,719 $ 119,542
(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 December 31, 2025. Long-term debt also includes total payments to be made under our failed sale-leaseback arrangements. As contractual interest rates and the amount of debt outstanding are variable in certain cases, actual cash payments may differ from the estimates provided.
Prior Credit Facility
On May 31, 2024, we entered into the Prior Credit Facility with RCS SBIC Fund II, L.P. and TCW Asset Management Company, LLC consisting of a $112.5 million term loan and a $25.0 million delayed draw term loan and an option allowing the Company to increase the size of the credit facility by $20.0 million through incremental delayed draw term loans. As of December 31, 2024, we had $92.6 million in aggregate outstanding principal balance under the Prior Credit Facility. InApril 2025, we amended the Prior Credit Facility through the Fifth Amendment to the Prior Credit Facility (the "Fifth Amendment") which increased the delayed draw term loan commitment by $10.0 million and extended the delayed draw availability period from September 30, 2025 to March 31, 2026. An additional $6.0 million was drawn from the delayed draw term loan in May 2025, followed by a subsequent draw of $5.0 million in August 2025. Concurrently with the consummation of the IPO, we repaid all outstanding borrowings under the Prior Credit Facility.
New 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 $30.1 million thereby reducing the outstanding principal balance of the New Term Loan as of December 31, 2025 to $19.9 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 to not 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 December 31, 2025, the weighted-average interest rate on outstanding borrowings under the New Revolving Credit Facility was 6.61%.
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 December 31, 2025.
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 December 31, 2025, 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.
Critical Accounting Policies and Use of Estimates
Our critical accounting policies related to leases, income taxes, Tax Receivable Agreement and equity-based compensation are as follows:
Leases
We lease stores, warehouse facilities and corporate offices under various lease agreements. At inception of a lease, we determine its classification as an operating or finance lease. All of our leases are classified as operating leases. Determining the probable term for each lease requires judgment by management and can impact the classification and accounting for a lease as financing or operating, as well as the period for straight-lined rent expense and depreciation period for leasehold improvements. To determine the length of the lease term at inception, we consider both termination and renewal option periods available. Reasonably certain renewal periods are included in the lease term at commencement.
We calculate operating lease right-of-use assets and lease liabilities at the present value of fixed lease payments over the reasonably certain lease term beginning at the commencement date. We use an incremental borrowing rate ("IBR") in determining the present value of future lease payments as there are no explicit rates provided in the leases. The IBR is an estimate based on several factors, including financial market conditions, comparable company and credit analysis as well as management judgment. If the IBR was changed, our operating lease right-of-use assets and lease liabilities could differ materially. See Note 8 (Leases) to our consolidated financial statements included elsewhere in this Form 10-K.
The Company has certain lease arrangement which resulted in sale and leaseback transactions that do not qualify for sale-leaseback accounting because of our deemed control of the underlying assets for accounting purposes, which results in the transaction being recorded under the financing method. These financial obligations are included in long-term debt on our consolidated balance sheets.
Income Taxes
In determining the provision for income taxes, we make estimates and judgments which affect our evaluation of the carrying value of our deferred tax assets as well as our calculation of certain tax liabilities. Our expense/(benefit) for income taxes and deferred tax assets and liabilities requires the use of estimates based on our management's interpretation and application of complex tax laws and accounting guidance.
Deferred taxes are recorded using the asset and liability method, whereby tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. We regularly evaluate valuation allowances established for deferred tax assets for which future realization is uncertain. In assessing the realizability of deferred tax assets, we consider both positive and negative evidence, including scheduled reversals of deferred tax assets and liabilities, projected future taxable income, tax planning strategies and results of recent operations. If, based on the weight of available evidence, it is more-likely-than-not that the deferred tax assets will not be realized, a valuation allowance is recorded. See Note 12 (Income Taxes and Tax Receivable Agreement) to our consolidated financial statements elsewhere in this Form 10-K for further details. Estimating future taxable income is inherently uncertain and requires judgment.
Tax Receivable Agreement
In connection with our IPO, we entered into a TRA with the TRA Parties. The TRA generally provides for us to pay the TRA Parties 85% of the net cash savings, if any, in U.S. federal, state and local income tax that we actually realize or are deemed to realize in certain circumstances. We will retain the benefit of the remaining
15% of these net cash savings. As of December 31, 2025, we recognized $38.9 million of liabilities related to our obligations under the TRA.
Changes in the projected TRA liability may occur based on changes in anticipated future taxable income, changes in applicable tax rates or other changes in tax attributes that may occur and impact the expected future tax benefits to be received by the Company. Estimating future taxable income is a key input in calculating the TRA liability, and is inherently uncertain and required judgment. In projecting future taxable income, we consider our historical results and incorporate certain assumptions. See Note 12 (Income Taxes and Tax Receivable Agreement) to our consolidated financial statements included elsewhere in this Form 10-K for further details.
Equity-Based Compensation
We have issued stock options and restricted stock units ("RSUs"). Equity-based compensation expense is measured based on the grant date fair value of those awards and is recognized on a straight-line basis over the requisite service period. Equity-based compensation expense is based on awards outstanding, and forfeitures are recognized as they occur. Equity-based compensation expense is included in selling, general and administrative expenses in the consolidated statements of operations.
We use the Black-Scholes-Merton ("Black-Scholes") option-pricing model to estimate the fair value of stock options on the grant date. The use of the Black-Scholes option-pricing model requires the use of highly subjective assumptions, including the expected term, risk-free interest rate, expected volatility, and expected dividend yield of the underlying common stock. The fair value of RSUs is equal to the fair value of our common stock on the date of grant.
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, 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.
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