As for this year, Tomasso doesn’t expect the macroeconomic environment to impact the company’s cadence of restaurant openings. Building costs have risen 8 percent, meaning an additional $75,000 per restaurant, but the CEO views this as manageable and still well within return on investment.
The real question, Tomasso says, is with supply chain, but he adds that his team has mitigated those obstacles, as well. He also notes First Watch has 40-45 restaurants in various stages of development to back up its 2022 projections.
“If we start to see one running into some delays, we can accelerate another one in order to hit those opening dates,” he says. “That's why we feel confident about it.”
The 2021 class achieved $2 million in annualized AUV, which is 11 percent higher than existing company volumes. That’s mostly because newer stores are able to serve more demand with larger, enhanced patios, indoor and outdoor bars, to-go entrances, and double-make lines to support off-premises, a business that earned $34.4 million in sales in Q4, a slight increase year-over-year.
Historically, First Watch moves between 3,200 and 3,600 square feet, but the chain is now seeing spaces of 4,000 to 4,500 square feet. Tomasso says the brand is having much success finding these bigger spots because the daytime-only hours are beneficial to developers.
“We're able to fit into a mix in a center that is appealing to the landlord, but also allows them to optimize their space,” the CEO says. “So that's one unique aspect of putting us in the center. And landlords are starting to recognize that and have recognized that for a number of years—that we’re a nice complement. And we get their centers open earlier in the day, which they like. So we have not had any issues finding sites. That again is one of the great benefits of this daytime-dining segment that we lead.”
First Watch usually opts for endcaps with as many glass windows as possible for natural light. In 2021, however, the brand opened quite a few standalone stores that were second-generation builds; some of them even came with their own to-go area. The chain currently isn’t doing any ground-up leases.
The brand takes a three-pronged approach to growth. One is filling core markets where it’s been for decades, like Orlando, Dallas, and Kansas City, and another is new markets, such as opening in Chicagoland last year. The third part is emerging markets, or areas where the chain has been a couple of years and just getting started—Detroit and New Jersey being two examples.