When I lived in Cincinnati, First Watch was the place for the “power breakfast”, where movers and shakers would gather to strategize over coffee and omletes. Meeting with a venture capitalist or political insider? You would likely meet them at First Watch. There is no First Watch where I live in Chicago, but here to breakfast is big deal for meetings with local favorites the Four Seasons, Orange, Bongo Room, and East Bank Club.
First Watch, the Florida-based chain with 76 company-owned restaurants in 11 states is planning to franchise this year. It’s only open for breakfast and lunch, and is always located in affluent suburbs and downtowns. Being closed for dinner, I was always skeptical that it could generate enough sales. Apparently, that is not a problem. Below
If the site meets our criteria, we think it’s a good time to build right now. We’ve weathered this economic climate pretty well so far. We have a very low check average [$7.50], we think we put out a high-quality product, and our value perception is high with our customers. We think that’s actually helping us. So far it’s been OK.
You’re not seeing declines in traffic or check averages?
We are not. We’re actually on our 25th straight year of same-store-sales increases. We’ve had 24. You never want to say that you’re recession proof, and we certainly don’t think we are. All we’re saying is that for the pressures that the consumer is experiencing now, we seem to be an outlet for that. We don’t know if it’s a trade from another dining occasion, trading off the expensive dinner to maybe a nice brunch on Sunday at our place. But we’ll take that.
Are you finding sites fairly easily?
No, I wouldn’t say fairly easily. We’re pretty disciplined in what we’re looking for, and we don’t like to waver from it. So to find sites that match all that criteria takes a lot of work and a lot of digging.
I will say, over the past two years, we’ve opened 11 and 14 restaurants respectively, which from a percentage basis, we were opening a large percentage of restaurants. Those stores are starting to mature now. Most of them are performing where we want them to be. Some are in markets where we didn’t have a lot of brand awareness, so we’re working a little harder to get up to our average unit volume.
Brand awareness is critical for all restaurants, as the Chief Marketing Officer confirms. The beauty of franchising is that hopefully you can buy into an established, well-recognized brand that will immediate generate sustainable sales upon opening.
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Ryan is an attorney and valuation specialist residing in Chicago. He chronicles his thoughts and research on FranchisePundit.com. You may reach him by email ryanknoll@gmail.com or mobile telephone 312-715-8115.
First Watch can do fine with a low base rent so long as breakfast is generally full. Denny’s, IHOP and the like barely breakeven for lunch and dinner.