First Watch Restaurant Group, a daytime-dining restaurant chain, has struck a deal to acquire 16 of its franchised eateries and corresponding development rights in North and South Carolina for $49 million as part of its long-term growth strategy.
The Bradenton, Florida-based company said in a securities filing Monday the pending transaction with franchisee Good Morning Carolinas will mark the second-largest franchisee deal in its history. The purchase, expected to close in mid-April next year, includes 15 franchise-owned restaurants and one that's under construction. That location is scheduled to open prior to the sale closing.
“Strategic acquisitions of franchise-operated restaurants like this one continues to be an important part of our long-term growth and value creation strategy,” Chris Tomasso, First Watch CEO and president, said in a statement.
“These 16 restaurants and the corresponding development rights will help solidify corporate ownership of First Watch restaurants along the East Coast — and provide us with additional territories in which to grow organically for years to come," he said. "We expect these restaurants will generate unit volumes and restaurant level operating profit margins in line with our company-owned restaurants, and we look forward to welcoming the teams from these restaurants into our organization.”
First Watch — serving breakfast, brunch and lunch — has 547 restaurants, including 466 company-owned and 81 franchisee-owned, located in 29 states. It rotates its menu five times a year and offers specialties such as its quinoa power bowl, lemon ricotta pancakes, and "Morning Meditation" fresh juice.
The restaurants in the most-recent transaction include North Carolina locations in Matthews, several in Charlotte, Concord Mills, Huntersville, Mooresville and Hickory. The South Carolina locations include Columbia, Fort Mill, Greenville, Simpsonville, and Rock Hill.
They represent "a significant incremental addition to the 45 total franchised restaurants acquired across six accretive acquisitions since May 2023," First Watch said in a statement. In April, First Watch completed its $75 million acquisition of 21 of its franchised eateries in North Carolina and their associated development rights.
“This acquisition, which represents our largest First Watch franchise acquisition to date,” Tomasso said back in April. “These 21 restaurants ... and the associated development rights represent white space in this key market area for us to grow organically for years to come. Further, this acquisition fortifies our organization and strengthens our ranks as we welcome more than 600 new employees into our corporate-owned system.”
The latest acquisition is expected to be funded through a combination of cash on hand and available borrowings under the company’s credit facility.