First Watch fans who relied on takeout through the pandemic might notice a few changes to the brand during their first breakfast or lunch back at a store, provided it’s one of the branches that cracked its first egg this year.
For one thing, they’ll see a bar. The daytime dining concept enjoyed a nice sales uplift from the surge in daytime drinking during the crisis, tempering the impact of seating limitations, says CEO Chris Tomasso. Many breakfast and lunch specialists noticed that patrons were more likely to indulge in a morning or midday cocktail while working at home instead of heading into an office. First Watch expects to have alcoholic beverages in a majority of its restaurants by the end of the year and in all units permitted to sell adult beverages by the end of 2022.
Patrons will likely notice that a section of units has been dedicated to to-go orders, both the staging and the handover. “They kind of serve as a counter for us,” says Tomasso.
At one new store, patrons will also have the option of picking up their orders at a drive-up pickup lane.
What customers won’t see is the second make line that some units are adding to handle the surge in delivery and takeout business. First Watch had negligible off-premise business pre-pandemic. Now that channel accounts for 25% of total store volumes.
Patrons also won’t see nuts-and-bolts changes in the kitchen, though they may get their meal faster as a result, Tomasso says. The brand is switching to expanded versions of certain pieces of equipment—larger grills that allow more pancakes to be prepared simultaneously, for instance. First Watch is also installing kitchen display systems to get orders back to the kitchen more quickly.
What they’ll hopefully appreciate is having shorter wait times because more seating is being added, partially through the addition of patios and in part because of larger and reconfigured dining room. “We still have unfulfilled demand, so we’re building larger restaurants,” says the CEO.
And they’ll ideally come away with an overall better experience because the general manager of their unit is no greenhorn. First Watch is trying to bolster their longevity by offering a series of stay bonuses through the summer. GMs and operations managers—the equivalent of an assistant manager in other chains—will receive a $500 payment if they’re still in their jobs at the end of June. They’ll collect another $500 at the end of July and $1,000 if they stay through August.
Not coincidentally, federal subsidies to state unemployment benefits will end in early September. Many restaurant employers say their retention and recruitment efforts have been blunted by the extra $300 a week that’s currently provided by 25 states.
First Watch expects its labor difficulties to ease when that work disincentive ceases. It also expects some recruitment relief from children returning to classrooms in the fall, freeing their parents from having to arrange for childcare if they want to work. Moms can once again drop the kids off at school before heading to a daytime shift. Because the restaurants shut mid-afternoon, a parent can get home early enough to watch the kids post-school day.
What neither patron, employee or even competitors will see is a plunge by First Watch into the alternative ventures that have drawn a slew of converts during the COVID-related slowdown in conventional business. Because the chain’s kitchens are idle at dinnertime, management has been repeatedly approached by would-be partners who’d like to use the prep facilities as ghost kitchens, Tomasso says. But he’s spurned the offers.
Nor is he looking to have First Watch itself use ghost kitchens. Ditto for their fellow traveler, the virtual restaurant brand, he says.
Another common diversification by full-service brands has been the spinoff of a limited-service version, such as Aussie Grill by Outback or IHOP’s new concept, flip’d.
“We’ve had a fast-casual location for three years now,” says Tomasso. “But we don’t have any plans right now to expand that concept.”
Those departures into new areas aren’t necessary, he says, because the mother brand is doing well. With all restaurants reopened and most operating at the full seating capacity, same-store sales have climbed past 2019 levels, though Tomasso declined to reveal by how much.
First Watch does have ambitious expansion plans overall. The chain anticipates opening 33 to 38 restaurants this year, 23 of them company-operated.
“We are doing more standalone units than we ever have,” comments Tomasso.
That doesn’t signal a change in its siting approach, he indicates. During the pandemic, “one of the big things that helped us was we were in suburbs,” he says. “We found we are a place of comfort for people—that was a key learning.”
That position has been validated by a slight change in customers’ buying habits as in-store dining resumed. “Our average checks are up by more than a price increase we took,” Tomasso continues. “People are indulging a bit.”
The life-during-wartime mindset foisted on his team by the pandemic had other unforeseen benefits. “With COVID, we did six months of work in about two months,” the CEO says. “We used that as a time to fortify some systems. We felt like there’d be a fight fo traffic at the other end. We stuck to what we’re all about”—though with a few adjustments to the times.
“We continued to invest in ourselves,” says Tomasso.