First Watch Acquires Bread & Company

Earlier this month, First Watch bought Bread & Company, a two-unit concept based in Nashville, Tenn.

That may seem small — First Watch will have 148 units by the end of the year — but it’s no less significant for the breakfast-and-lunch chain. Bread & Company is a fast-casual concept, presenting full-service First Watch with a host of possibilities, not just for Bread & Company’s two units, but for the concept as a whole.

“The lucky part about Bread & Company is it has a different service model,” First Watch CEO Ken Pendery said. “First Watch is a full-service concept. And we’ve always thought of ourselves as a pretty fast delivery model. The one thing Bread & Company offers is we can have some form of fast-casual component to it.”

That component and other aspects have yet to be designed. But the concept could ultimately give First Watch some insight into service speed. It could also provide the basis for a combined service model with elements from full service and fast casual. And some of the things the company learns at those two units could be applied systemwide.

For now, Pendery said the two-unit brand would operate under the Bread & Company brand as a traditional fast-casual concept.

“The great part about being able to pick up a brand that’s been successful with a service model or a specific menu item or a beverage program is we’re looking for something we can learn from,” he said.

The purchase of Bread & Company isn’t the only acquisition for First Watch over the past couple of years. Earlier this year, First Watch bought The Good Egg, an Arizona-based breakfast chain that gave the company 20 locations in Arizona. In 2012, First Watch bought two J. Christopher’s locations.

The acquisitions have supplemented First Watch’s robust new unit development. Pendery said the company expects to complete the year with 10 new units, and expects to add 15 locations next year.

“It’s been a busy couple of years,” Pendery said. “But when you’re growing, it’s always more fun. They’re nice problems to have.”

The previous acquisitions, however, were of full-service concepts similar to First Watch. The Good Egg locations remain under that brand, and will likely remain so, Pendery said.

The company is launching a new “Urban Farm” reimaging in its system, and The Good Egg will have the same remodel, but with a different brand name. “It has the history of a 30-year-old company,” Pendery said. “We don’t want to shock the customer with a rebrand.”

Pendery acknowledged that the primary goal of buying Bread & Company was to get its real estate. The chain was founded in 1992 as an artisan bakery serving breads, rolls, pastries and coffee, and had just 15 seats. In 1995, the chain expanded to include salads and sandwiches. It built a following and had as many as four locations.

Recently, the brand “just lost a little luster,” Pendery said, but still had loyal core customers. The company had two remaining locations in good sites. “We were really after that location,” he said. “In some instances, some acquisitions are as much real estate driven and location driven as for the brand itself.”

The company is reconstructing one of the two locations and plans to keep the brand intact, at least for now. “We have the option to rebrand,” Pendery said. “We’re in no rush to rebrand until we get close to the customer. We’re not afraid to operate a different brand. It’s possible it will become a First Watch, if not likely.”

While the brand has a different service model, that model “is not hard,” Pendery said. But the brand serves food similar to First Watch, only in a fast-casual format, like breakfast omelets and waffles. “They do things we do,” Pendery said. “We think we can work with that breakfast component in fast casual and pick up elements we could use in some parts with First Watch going forward.”

This doesn’t appear to be First Watch’s last acquisition. Pendery said this week that the company could continue to make acquisitions if and when opportunities come available.

“We’ll have organic growth and franchise growth and the occasional acquisition,” he said.

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