Casual dining chain First Watch is considering going public as it eyes expansion to potentially more than 2,200 locations from its current 423 “daytime cafes” located mostly in Southeastern states.
Founded in 1983 in California, First Watch has established a niche by serving only breakfast, brunch and lunch from one menu featuring fresh and healthy foods.
On Tuesday, First Watch Restaurant Group Inc. filed a possible initial common stock offering with the Securities and Exchange Commission. The filing did not indicate how much money the company—which relocated its headquarters to Florida in 1986—might raise.
In addition to paying off debt, proceeds from a public offering would help to expand First Watch’s advertising activity—which has largely consisted of word of mouth for 38 years.
The name First Watch derives from the term that signifies a nautical crew’s first shift of the day. Its mostly corporately owned locations are open seven days a week from 7 a.m. to 2:30 p.m.
The chain specializes in approximately 60 “made-to-order” entrée items made with such protein-rich ingredients as cage-free eggs, quinoa, organic mixed greens and all-natural chicken. One of its differentiating boasts is that “you will not find microwave ovens, heat lamps or deep fryers in our kitchens.”
Despite the pandemic’s impact, the company had 42 new restaurant openings in 2020 and 18 in the first half of 2021.
Its most significant shift during the pandemic was the addition of alcoholic beverages last November. In line with its food offerings, the drinks combine fresh juices and ingredients with a variety of liquors ranging from coconut rum to tequila, gluten-free vodka to sparkling wine.
Alcohol helped contribute to net income for First Watch of $1.8 million in the 26 weeks ended June 27, compared to a loss of $31.4 million in the 26-week period ended June 28, 2020.
Now in 28 states, the chain’s largest footprint is in Florida (102 restaurants) followed by Texas (55). It has no presence in California or the Pacific Northwest.
“Our deeply experienced restaurant development team in partnership with a third-party real estate analytics firm conducted an in-depth study that concludes we have the potential for more than 2,200 locations in the United States,” the offering document states.
A concurrent lift in advertising spending—now roughly 1% of First Watch’s annual revenue—would help to raise brand awareness. The company cited a nationally representative survey that showed just 11% of respondents are aware of the chain.
“We believe First Watch is still in the early stages of our life cycle, as consumers in our existing and new markets continue to discover the First Watch brand.”
While noting that “organic growth of awareness contributes more to our local feel,” the chain said it recognizes “the future potential of strategically applying advertising dollars in appropriate channels to accelerate this opportunity.”
First Watch’s most recent YouTube videos feature the chain’s corporate chef, Shane Schaibly, debuting such menu items as “brilliant beet toast” and carnitas breakfast burritos.
Likewise, food is front and center on the company’s Instagram account.