Updated 2 months ago
CEO: Chris Tomasso
Restaurants: 346 company-owned and 95 franchise-owned in 28 states, 111 in Florida
2021 Revenue: $601.2 M
Rank: No. 115 on list of private companies; will be ranked as a public company in 2023
In First Watch kitchens, there are no microwaves, heat lamps or deep fryers. There’s one shift for its employees and one menu, updated seasonally, for customers. Still, the company’s strategy of keeping it simple, yet ambitious, is proving fruitful.
When many restaurants floundered as the coronavirus pandemic dragged on and labor shortages hit the industry, First Watch continued to expand and carved out a niche in a tight labor market because it could promise future employees no night shifts, ever.
Having gone public in late 2021, First Watch has its sights on high-growth markets, aiming to open 130 restaurants from 2022 to 2024. In shaping its breakfast, brunch and lunch menu, it has kept an eye on food trends, the blossoming demand for lighter fare, and the sourcing of ingredients — for example, its coffee comes from an independent group of female farmers in Colombia.
First Watch CEO Chris Tomasso, a 16-year veteran of the company, says the chain will continue to locate new restaurants “front and center” in high visibility locations to increase its national profile, even as it continues to play to its local comprehend our scope,” Tomasso says. “Even in Sarasota, people think we are town near you soon.”
Founded in 1983 in California and relocating to Sarasota just three years later — where its corporate office was a 250-sq.- ft. room with two desks — the restaurant creating seasonal menus with health-conscious options that were more upscale cafe feel. “I think most people don’t really here and in Orlando. We’ll be coming to a chain was ahead of the industry wave of than typical greasy spoon diner fare. At last count, First Watch has more than 10,000 employees and 441 restaurants — 346 company-owned and 95 franchise-owned — across 28 states. Florida is the largest single market, with 111 locations.
Prior to the pandemic, First Watch posted 28 consecutive quarters of same-restaurant sales growth from fiscal years 2013 to 2019 and positive annual same-restaurant traffic growth from fiscal years 2014 to 2019. This year, the chain isn’t adding any new states to its national presence but will fill gaps in the Chicagoland market, which it added in 2021, and continue to expand in Orlando, which has been one of its core markets, Tomasso says.
Tomasso describes the guiding philosophy for the chain: “If we can do it in one, we should be able to do it in a thousand. Most restaurant companies, when they get to our size, start doing things differently than what got them where they are,” he says. “We’re hyper-focused on staying true to who we are and what we’ve done regardless of how big we get.”
Tomasso was named CEO in 2018 after serving as president since December 2015 and chief marketing officer from 2006 to 2015. Prior to joining First Watch, the University of Central Florida alum who was a first-generation college student, worked for national chains Cracker Barrel and Hard Rock Café. He heads an executive team with experience rooted in Bloomin’ Brands — the parent company of Outback Steakhouse, Carrabba’s and others — the Melting Pot and PepsiCo. Tomasso succeeded co-founder Ken Pendery, who still serves as a director and chairman emeritus of the First Watch board. Fellow co-founder John Sullivan retired in 1998.
The pandemic caused First Watch, like most restaurants, to pivot to online ordering, delivery services and socially distanced dining. The company fast-tracked online ordering and waitlist management technology and changed some of restaurant layouts and designs, Tomasso says. “Many of our newest locations feature prep and pickup areas specifically for to-go orders and dedicated parking spots and entrances to make the carry-out process fast and convenient for our guests.”
As life and dining habits began to return to normal, First Watch’s $34.4 million in takeout sales during the fourth quarter of 2021 were higher than the year-earlier period’s $33.7 million, even as in-restaurant dining rebounded. Because of its focus on meals for the first half of the day, First Watch is accomplishing its sales success being open just 7½ hours a day — eschewing the less-profitable zone between late lunches and early dinners and the expense of executing more costly dinner menus.
First Watch’s IPO raised $170 million, which is being used to pay down debt and help the company reach its long-term goal of 2,200 restaurants. In addition, the debt reduction will allow the company to spend more on expanding, Tomasso says.
Analysts are generally optimistic about the stock’s future after it struggled this spring along with the sector, which mostly fared worse than broader stock indexes. “Our strategy is to continue doing what we do,” Tomasso says. “We can’t control stock prices. We’re focusing on what we consider the true value of business, and that is increasing sales, serving more people and opening more restaurants.” Still, he says, going public was the right move for First Watch. “It made a lot of sense, and it is really helping to fuel our growth. Over time, this will all come together.”
Global restaurant analyst Aaron Allen, a former Florida Restaurant Association executive who now leads the Chicago-based consulting firm that bears his name, has long observed First Watch’s trajectory. With the company’s growth prospects and its ability to innovate, the company has a long future ahead of it, Allen says. “Some investors want slow steady cash flow, easy to forecast growth,” he says, adding there remains an investor appetite for restaurant stocks that are “more vanilla rather than something exotic.”
“It’s not necessarily a sexy stock or a sexy restaurant chain, comparatively speaking. It’s slow and steady. They have grown at a terrific pace, but I suspect they are going to come up against some competition, stiffer competition than they have had in the past,” Allen says.
The challenge for First Watch in bringing value to investors is to find ways to maximize sales when its restaurants have limited hours — that requires management to find new ways to increase sales for each customer and to find innovations that squeeze new value out of operations without compromising the quality of guest experiences, Allen says. Adding brunch cocktails to the menu is one way to accomplish that, he notes, as long as the restaurants stay true to their family-friendly vibe.
What could be a challenge for First Watch, though, is competition from edgier restaurants and an aging clientele, Allen says. Potential solutions for drawing new customers include menu innovations, new locations and developing new markets via franchising. “They can’t get into a pinch like Piccadilly and Marie Callender’s with clientele dying off and then they can’t replace them. That’s what is tricky: Who is that customer and where are you going to find them?”
First Watch launched its cocktail menu in late 2020, building off its juice bar offerings. Its bar menu, now available at most locations, includes cocktails such as the Million Dollar Bloody Mary, made with gluten-free vodka and a piece of First Watch’s Million Dollar Bacon, and the Pomegranate Sunrise, made with Camarena tequila, pomegranate, lime and agave nectar. “Unlike mass-production, bottomless mimosa-style establishments, First Watch’s menu of craft cocktail creations features fresh fruits and vegetables that are juiced in-house every morning,” Tomasso says.
It was customer surveys that led to the addition of the high-end alcohol offerings, Tomasso says, in a move that enhances the brunch experience without putting alcohol at the forefront. “We’re rolling it out the right way,” he says.
“It’s not a fad; it’s here to stay,” he says of the company’s rise-and-shine outlook. “Consumers are interested in eating healthier with high-quality ingredients. We’ll continue to leverage what we do really well.”