There’s an excitement that comes with having one of the top U.S. private equity firms invest in a Southwest Florida-based company.
But it’s not really anything that Ken Pendery, the CEO of First Watch, expects you to notice.
It’s not like when the breakfast, lunch and brunch chain unveiled its fresh juice bar in 2015 or upgraded its décor from soft pastel tones to rustic-farm-inspired wood. Customers may have noticed when the menus moved to gastropub-like brown cardstock about three years ago just a little after a shaker of raw brown sugar appeared on the tables next to typical paper packets. The chain also ditched the little tubs of commercially produced jelly for homemade jams and started pumping more things like quinoa and kale into their dishes.
We’ve seen quite a few changes from the Manatee County-based daytime café giant in recent years as it’s held on to its three-decade-strong roots but adapted into modern brunch culture.
The recently announced merger with Advent International, however, likely won’t be visible.
I caught up with Pendery and First Watch’s president, Chris Tomasso, late last week on the heels of the deal, wondering what was next for the chain and its Southwest Florida home base.
The 33-year-old Advent had completed more than 325 private equity transactions in 40 countries and had $39 billion in assets under management as of March. The firm also has a prominent collection of national retailers such aslululemon and Five Below in its portfolio. There’s a wide base of knowledge there that First Watch can tap into, Tomasso said, but he doesn’t expect the deal to cause the restaurant chain to deviate from the path its already on.
This is, after all, the third time First Watch has sought out a private equity buyer. It’s not entirely new ground.
We saw a major shift in the cafe chain’s expansion mentality when the company was acquired by Los Angeles-based private-equity firm Freeman, Spogli & Co. in 2011, after Catterton Partners had bought it in 2004.
That’s when First Watch started lapping up competitors almost as quickly as I’ve been known to work my way through one of their power bowls.
With Freeman, Spogli & Co. on the back end of the business, First Watch in 2014 bought The Good Egg and its 20 Arizona-based restaurants. That move extended the company’s reach westward and made Phoenix its largest single market. A little more than a year later, First Watch took on Colorado-based The Egg & I Restaurants, which nearly doubled its restaurant total and brought its biggest competitor into the fold. Somewhere in between, the café chain picked up Nashville-based Bread and Co.’s two restaurants, too. That move was designed to better prepare First Watch to serve a busier, more urban market.
It’s been six years of undeniable growth for First Watch, and now that they’re in bed — or rather in a booth — with Advent, the executives tell me that’s not going to change.
Advent appreciates the plan they have in place, Tomasso said, and it likes that the company is based in Southwest Florida.
As of 2016, the chain had shown 33 years of positive same-store sales growth and finished that the year up 7 percent. First Watch currently has more than 300 restaurants across 26 states, predominantly Texas, Ohio, Colorado, Arizona and Florida.
It also is on target to open as many as 50 restaurants annually between franchise opportunities and corporate stores for the next few years, Pendery said.
While there’s no set time frame for how quickly the chain will grow, Tomasso believes the company could eventually have as many 1,300 locations.
The breakfast business is hot right now, and it’s not just the griddle.
Fifteen percent of family-dining restaurants and 16 percent of quick-service and fast-casual restaurants will target breakfast and daytime service this year, according to the National Restaurant Association’s 2016 Restaurant Industry Forecast.
Consumers are continually dumping more cash into the first meal of the day, and that bodes well for First Watch’s corporate home.
The local headquarters in University Park was supposed to last the daytime café giant a decade. That was back in 2011, and it’s already outgrown it. Twice.
First Watch had to move its accounting department to a nearby 4,752-square-foot office in the same corporate park in July 2015, just after it picked up The Egg and I. The development team followed in December when it moved into its own 2,244-square-foot space.
That Manatee County office had just 39 employees in 2014, the same year it acquired The Good Egg.
At 73 today, that team has nearly doubled just like the restaurant base has. Imagine what 1,300 restaurants would do for the corporate office.
That’s likely not a change you’ll notice when you’re at one of their cafés’ tables, either.
But it’s one that should mean quite a bit more to Southwest Florida than a raw sugar shaker or a brown cardstock menu.
Source: Herald Tribune, August 2017
