Breakfast, brunch and lunch concept operator First Watch Restaurants Inc. has entered the Atlanta market by acquiring two existing eateries.
Bradenton, Fla.-based First Watch acquired two J. Christopher’s breakfast, brunch and lunch restaurants — one in John’s Creek, Ga., and the other in Smyrna, Ga., — from J. Christopher’s Restaurants LLC of Atlanta. The terms of the sale were not released, but First Watch said that it also acquired the right to purchase the J. Christopher’s brand, concept and all intellectual property, contingent on certain developments.
“Expanding First Watch into Atlanta is an integral component of our market development strategy following our recent successful expansion into Jacksonville and Nashville,” Ken Pendery, First Watch chief executive and president, said in a statement. “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.”
First Watch has several restaurants in the Washington, D.C., market, so part of the rationale for entering Atlanta was the idea “we could grow from Georgia northward” to intersect with that established territory, Pendery said.
Pendery said that while traffic has been flat at First Watch, the chain has seen a 2.8-percent increase in same-store sales in 2012, primarily as a result of a 2.5-percent increase in menu prices earlier this year.
J. Christopher’s Restaurants LLC is owned by Dick Holbrook and Sam Haddock, who in 2009 acquired the rights to J. Christopher's intellectual property from founders Jay McCann and Chris Brogdon, who still own 20 of the 22 restaurants in that chain. Holbrook and Haddock, who sold their two J. Christopher’s restaurants to First Watch, currently are in talks with McCann and Brogdon, who have an interest in reacquiring the intellectual property for the chain they founded in 1996, Pendery told Nation’s Restaurant News.
“If [the current owners and original founders] don’t come to agreement” about J. Christopher’s intellectual property, said Pendery, “then First Watch can acquire it, and then we’ll decide what we will do.”
Pendery said he anticipates a resolution in the next 30 to 45 days. Should First Watch end up with the intellectual property rights for J. Christopher’s, he said, “We’d sit down with the founders and do our best to work out an arrangement where we’d manage those rights and talk to them about their interest in being a First Watch, or our interest in managing with them that concept under the name J. Christopher’s [under] some sort of financial arrangement.”
The deal with J. Christopher’s Restaurants LLC marked the first acquisition by 29-year-old First Watch, which changed ownership itself in December 2011 when controlling interest in the firm was sold by private equity firm Catterton Partners to Freeman Spogli & Co., a Los Angeles-based private equity firm.
“I can’t say we’re an acquisition-focused company, but assuming this goes well, and I have every reason to believe it will, if this sort of thing comes up again, we’d be interested,” Pendery said.
First Watch opened its 100th unit in Panama City, Fla, on Oct. 29. That restaurant is operated by franchisees Brad and Keith Dermond, owners of Sunrise Foods LLC, under a multi-unit franchise agreement to open at least three restaurants in Panama City, Destin and Fort Walton Beach over the next three years.
Franchisees currently operated about 10 percent of the chain, but Pendery said his company is working to move the share of franchised stores closer to 30 percent over the next five to six years. By that time, the chain would like to have about 200 company restaurants and 75 to 80 franchised stores up and running or in the development pipeline, he said.
To help First Watch Restaurants LLC meet those development goals, the company last week said that it had hired Richard Renninger as its chief development officer. Renninger previously served as the executive vice president and chief development officer for the company now known as Bloomin’ Brands, which is the parent to the Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill, Fleming’s Prime Steakhouse & Wine Bar and Roy’s chains, among other holdings.