LAKEWOOD RANCH — First Watch Restaurants has been growing aggressively for years, closing in on its 100th restaurant by opening in numerous states under its corporate banner or through tightly controlled franchise agreements.
Now the Lakewood Ranch-based chain, perhaps best known for its breakfast offerings, has launched a new chapter in that growth story with a deal for two Georgia restaurants and the possibility of dozens more.
The deal for the two company-owned sites of Atlanta-based J. Christopher’s Restaurants LLC is the first acquisition in First Watch’s 30-year history.
Initially, only the pair will be converted, but in time another 19 franchise restaurants also could become First Watch restaurants because the local company now has an option to buy the licensing agreements for those businesses.
The deal will further allow First Watch to geographically connect restaurants it owns in Florida with its establishments in Tennessee and Indiana.
“Expanding First Watch into Atlanta is an integral component of our market development strategy following our recent successful expansion into Jacksonville and Nashville,” said First Watch chief executive Ken Pendery. “Acquiring these two high-performing J. Christopher’s restaurants is an ideal way for us to establish an immediate, solid base upon which we can expand throughout not only Atlanta but Georgia and the rest of the Southeast.”
The push into Georgia comes as First Watch is about to open its 100th restaurant later this month, in Panama City, and as many Americans have resumed eating out — especially at value-oriented venues — after curtailing such dining over the past four years. First Watch’s growth, to this point, has been exclusively organic.
The deal for J. Chistopher’s comes in the wake of First Watch’s corporate acquisition by the Los Angeles-based private equity firm Freeman, Spogli & Co. late last year. Freeman Spogli has stakes in Boot Barn, El Pollo Loco, Petco, hhgregg and Sur La Table.
First Watch, which concentrates on casual breakfasts, brunches and lunches, is also moving its headquarters into a bigger space in south Manatee County, where it plans to add to its corporate team.
Industry analysts applauded the J. Christopher’s deal as a solid further move into a growing segment of the American dining experience.
“This move makes perfect sense for First Watch,” said Darren Tristano, executive vice president of Technomic Inc., a Chicago- based food consulting firm.
“We’ve seen a significant growth trend in the breakfast-lunch market. Chains that focus on all three day parts don’t do it as well as those that do it in two,” Tristano said, noting that most full- service restaurants’ core market remains dinner.
They, in turn, typically offer a lackluster breakfast.
Michael Terry, a professor at the University of Central Florida’s Rosen Hospitality College, agrees.
“This is a good sign for healthy business,” Terry said. “It should be a smooth transition. It is a concentric circle — they are taking over a chain that already understands the neighborhood and has a similar business model.”
J. Christopher’s debuted in Marietta, Ga., in 1996. In 2009, the brand was acquired by industry veterans Dick Holbrook and Sam Haddock.
“We’re positive that existing customers of these two J. Christopher’s restaurants will come to know and love First Watch and its unique offerings,” said Holbrook, J. Christopher’s chief executive.
With First Watch’s purchase of the two company-owned restaurants and franchise restaurants, the future of the J. Christopher’s name is uncertain.
“We are still working out those details,” said First Watch spokesman Chris Tomasso. “But we’re looking to grow the franchise end of our business.”
J. Christopher’s appears to have prospered in the wake of the Great Recession and subsequent sluggish economy. The company has received several awards in its breakfast category from Georgia- based media outlets in recent months.
“I think it was just a good time for them to sell,” Tomasso said.
First Watch operates restaurants in 14 states, including 39 in Florida. The company opened a franchisee-owned restaurant in Ocala recently, and that 100th restaurant in Panama City also is a franchise.
First Watch generates roughly $100 million in annual sales.
FIRST WATCH RESTAURANTS INC.
Headquarters: 9027 Town Center Parkway, Bradenton
Locations: 100 total; 40 in Florida
Annual sales: about $100 million
Serves: Breakfast, lunch and brunch
Region: Arizona, Florida, Indiana, Kansas, Kentucky, Maryland, Missouri, Ohio, Oklahoma, Pennsylvania, Tennessee, Virginia, West Virginia, Wisconsin
Median price per check: $9
Buying: J. Christopher’s Restaurants LLC, two company-owned restaurants and an option on 19 other, franchised stores in Georgia