First Watch agrees to acquire one of its largest franchisees

The chain will pick up 21 restaurants in North Carolina, bringing total franchised location acquisitions since May to 44.
The deal, including the franchise rights, is for about $75 million. |Photo: Shutterstock.

First Watch has picked up another large franchise group.

The daytime dining concept on Monday announced it has agreed to acquire 21 restaurants in North Carolina, as well as the corresponding franchise rights for the territory, for an aggregate $75 million.

The move comes as the Bradenton, Fla.-based chain also previewed fourth quarter results, through Dec. 31, saying preliminary same-store sales were up 5% for the quarter, as of Dec. 31, and up $7.6% for the year.

Traffic, however, was down 1.3% for the quarter, though it improved sequentially during the period, the company said. For the year, traffic was up 0.2%.

Since May, the chain has picked up 44 franchised restaurants as part of five acquisitions. Each of the prior acquisitions was subject to a purchase option negotiated before the company’s initial public offering in 2021.

“Our acquisition of franchise-operated restaurants is an important part of our long-term growth and value creation strategy, and this represents our most significant transaction to date,” said Chris Tomasso, First Watch’s CEO and president. “We expect these 21 restaurants in one of our key markets will generate average unit volumes and restaurant level operating profit margins in line with our company-owned restaurants and provide us with additional territories in which to grow organically for years to come.”

For the deal in North Carolina, which is expected to close by the end of April, First Watch has amended its credit agreement to offer financial flexibility, which will allow for the franchisee acquisitions and new restaurant construction.

At the ICR Conference in Orlando, Fla., Monday, Tomasso said First Watch remains a “conservative debt company,” despite the 11% growth in 2023 year over year.

The chain added 51 new restaurants across 19 states last year, including 37 company owned and 14 franchise units, for a total of 524 (425 company owned and 99 franchised) with one company-owned restaurant closure.


Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.


Exclusive Content


Crumbl may be the next frozen yogurt, or the next Krispy Kreme

The Bottom Line: With word that the chain’s unit volumes took a nosedive last year, its future, and that of its operators, depends on what the brand does next.


4 things we learned in a wild week for restaurant tech

Tech Check: If you blinked, you may have missed three funding rounds, two acquisitions, a “never-before-seen” new product and a bold executive poaching. Let’s get caught up.


High restaurant menu prices mean high customer expectations

The Bottom Line: Diners are paying high prices to eat out at all kinds of restaurants these days. And they’re picking winners and losers.


More from our partners