The First Watch breakfast-and-lunch chain has agreed to acquire 15 restaurants and the rights to open additional stores in North and South Carolina from a franchisee for $49 million.
A 16th unit under construction is also part of the deal.
First Watch says it will pay for the stores with cash on hand and borrowings from current credit facilities. It specified that it acquired no debt from the seller, who was not identified.
If the deal closes as scheduled in mid-April, First Watch will be the operator of about 482 of the chain’s 548 locations. The franchisor has been selectively buying franchised stores as a key part of its strategy. Since May 2023, 45 franchised branches have been turned into corporate-run stores.
“Strategic acquisitions of franchise-operated restaurants like this one continues to be an important part of our long-term growth and value creation strategy,” CEO Chris Tomasso said in a statement. The purchases “provide us with additional territories in which to grow organically for years to come.”
The company indicated in announcing the 15-store deal that it already operates many of First Watch’s stores along the East Coast.
The largest brand in the fast-growing breakfast, lunch and brunch subsegment of family dining has been a standout exception to the “asset-light” strategy professed by many chains that franchise. The advocates prefer to tap field-level operators’ capital for their brands’ expansion instead of deploying all those dollars themselves.
First Watch was stung like many in the restaurant business by a drop-off in traffic during the third quarter. Transaction counts declined 4.4% during the period for the chain. Executives attributed the loss of business to patrons eating breakfast at home more often.
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