At an investor conference this week, First Watch CFO Mel Hope was asked whether he felt there was anything about the brand that investors were overlooking.
“I'm glad you asked that,” he said at the Barclays Eat, Sleep, Play, Shop Conference on Tuesday, according to a transcript from financial services site AlphaSense. “When we went public four years ago, we had 428 or so restaurants. Now, we have almost 200 more restaurants. … I think people miss our growth engine, the power of the growth engine.”
Bradenton, Florida-based First Watch has indeed been growing rather quickly. Its unit count increased by 9.2% in 2024, from 524 locations to 572. That was the fastest rate among the top 20 full-service restaurant chains, and more than twice as fast as the next closest, Texas Roadhouse (4.1% unit growth), according to Technomic data.
And within its peer group of sit-down, breakfast-focused chains, First Watch is one of the few large brands opening new restaurants at all. Among the top 10 family-dining chains, Waffle House and Black Bear Diner were the only others to finish last year with more locations than the year before, per Technomic.
First Watch will finish 2025 having added up to 64 new locations, and now has more than 620 restaurants in 32 states, with plans to grow that number by 10% annually. That means another 60-plus new stores in 2026, or more than one new opening every week.
Of course, new restaurant openings are not the only mark of a healthy chain, and industry history is full of brands that grew too fast. But First Watch has also been showing strength in other areas. Last quarter, same-store sales rose 7.1%, among the best marks in the industry during the period, and restaurant-level profit margins were up 80 basis points, to 19.7%.
The company has credited a focus on good service, high-quality food and reasonable prices, plus a growing delivery business, for bringing customers in.
And its new restaurants are performing even better. Nine of the chain’s 10 highest opening-week sales ever have happened within the past 12 months, some of them in brand-new markets. Some new locations are opening at 190% of the chain's average unit volumes, the company said.
Those new openings are a key part of its overall growth formula, because they introduce the brand to more consumers and bring new employees into the system—about 50 or 60 per store. As those workers gain experience, they can help the chain open new locations.
“New restaurants are kind of the lifeblood of how we grow,” Hope said.
And it sees plenty of room to keep growing. First Watch has its sights set on reaching 2,200 locations across the U.S. one day, which would give it one of the largest footprints of any full-service restaurant chain. Today, that title belongs to Waffle House, which has just over 2,000 locations.
Founded in 1983 in Pacific Grove, California, First Watch helped establish what it calls the daytime dining segment. Its restaurants serve breakfast and lunch, opening early in the morning and closing by midafternoon. Its menu is made from scratch and features innovative takes on breakfast staples.
Despite its strong track record and potentially large market, Wall Street has been mostly lukewarm on the brand. As of Wednesday afternoon, its share price was down about 4% year to date, and nearly 19% all-time. However, its stock has outperformed those of other full-service chains this year. Shares in that segment are down 11% year to date on average, including major losses at Cracker Barrel (negative 47%) and Bloomin’ Brands (negative 43%).
One question is whether First Watch can keep up its torrid development pace. As its footprint gets larger, 10% annual growth becomes a higher bar to achieve. But Hope said it’s sustainable.
“Our developers are very data-driven. So one of the ways they are able to deliver on that every year is by taking possession of the facilities sooner than maybe we used to in order to make sure that we're not at the mercy of a developer,” he said. That allows the company to start filling up its pipeline several years in advance.
And because it uses data to guide site selection, it can be fairly certain that new locations are going to work. “The results are very predictable,” Hope said. If anything, the company sometimes underestimates the demand a new restaurant will get. “We'll have one pop and surprise us with the outsized volumes,” he said. “We have to be ready for those, because that's our first First Watch occasion in many of those communities.”
New restaurants are funded for the most part by operating cash from mature restaurants, rather than borrowing money, Hope said. New stores tend to be less profitable at first than the chain average, due to the high costs of opening, but typically mature within a year.
As First Watch gets bigger, it believes its scale and brand recognition will ultimately help grease the skids for more restaurants.
“Developers have us on speed dial when they’re merchandising a center, and they need a concept that’s going to open up their center with a vibrant foot traffic early in the morning,” Hope said. “It's part of why we're leaning into so much development, because I think we're going through the salad days at First Watch, and I think this is the time for us to stretch out the lead.”
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