First Watch moves into first place

From humble beginnings in 1983, First Watch has a new identity: largest breakfast-brunch-lunch restaurant chain in the country. 

The company, with corporate headquarters in a University Park office complex, acquired Centennial, Colo.-based The Egg & I Restaurants, in a deal announced May 27. The acquisition creates a 267-restaurant chain across 26 states. Financial terms of the deal weren’t released. 

First Watch executives say the deal was based more on luck, the right opportunity and an uncanny corporate culture fit than a burn to get bigger. “Even though this pushes up our numbers in a big way,” said First Watch CEO Ken Pendery, “we still don’t see ourselves as a big company.”

The numbers tell a different story. 

First Watch, backed by Los Angeles-based private equity firm Freeman Spogli & Co., has 153 restaurants in 17 states. The Egg & I has 114 locations in 20 states. First Watch leans corporate-owned in its store mix, while The Egg & I is heavy on franchise. 

“They have a significant franchise platform,” Pendery said. “That’s what drove the enthusiasm.”

The zeal to do a deal also stems from both chains’ devotion to uncomplicated menus, steadfast quality customer service and good food. 

“I had the chance to spend quite a bit of time with First Watch CEO Ken Pendery and his executive team,” said The Egg & I President and CEO Don Lamb, in a statement, “and I have no doubt that we will work well together.”

“We aren’t a company out to make crazy acquisitions. This was a little bit of luck, having a great company and brand available to us.”  

 

– Ken Pendery, First Watch CEO

 

Both companies were founded by entrepreneurs in the mid-1980s and grew slowly, at first. The hours are similar, and neither chain offers dinner. First Watch locations, on average, do about $1.2 million a year in sales, Pendery said, while The Egg & I stores do about $1.1 million each. 

Pendery said the genesis of the deal came from a phone call late last year when he heard The Egg & I was up for sale. Pendery and his executive team met with The Egg & I leadership team, including Lamb, several times in early 2015. The deal fell into place from there. 

The deal caps a two-year period of major growth at First Watch, from smaller acquisitions to large franchise agreements. First Watch will remain in growth mode, but Pendery said he has no plans to chase acquisitions for the sheer thrill of the deal.  

“We aren’t a company out to make crazy acquisitions,” Pendery said. “This was a little bit of luck, having a great company and brand available to us.”