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First Watch sold to private equity firm Freeman Spogli

Terms of the sales from Catterton Partners not disclosed

First Watch, the 92-unit daytime restaurant concept, has been sold by private equity firm Catterton Partners to Freeman Spogli & Co., a Los Angeles-based private equity firm with holdings in El Pollo Loco.

Terms of the deal were not disclosed.

First Watch’s current management team – including president and chief executive Ken Pendery Jr., chief financial officer Ken Cruley and chief marketing officer Chris Tomasso – will remain in place and will retain a “meaningful equity stake” in the business, officials at Catterton said in a statement released Friday.

Greenwich, Conn.-based Catterton had held a majority stake in the Bradenton, Fla.-based breakfast-and-lunch concept since 2004.

“We are proud of the significant growth First Watch has experienced and are pleased to have participated in the company’s great success,” Jon Owsley, a partner in Catterton, said in a statement.

New owner Freeman Spogli holds a non-controlling stake in the Costa Mesa, Calif.-based El Pollo Loco grilled chicken chain, through a $45 million investment in 2007. The equity group previously held investments in AFC Enterprises Inc., parent to the Popeye’s Louisiana Kitchen brand that also once owned Church’s Chicken and Seattle’s Best Coffee.

First Watch chief executive Pendery said both private-equity firms have “wonderful experience and a great sense of consumer brands,” and that First Watch would continue its growth with Freeman Spogli.

“Working with Catterton, we were able to significantly expand our brand and solidify our position as the largest and fasted-growing daytime-only restaurant concept in the United States,” he said. “We believe that First Watch is uniquely positioned to continue our aggressive growth and development and look forward to doing so together with our new partners at Freeman Spogli, who have also demonstrated an ability to work with management to drive significant value.”

Over the past seven years with Catterton – which holds interests in Cheddar’s, Noodles & Co. and Outback Steakhouse – First Watch has doubled in size, expanding westward into new markets. Same-store sales and earnings have more than quadrupled over the last five years, the company said.

Except for flat sales in 2010, First Watch has seen same-store sales increases in 27 out of its 28 years of operation, said Tomasso.

Now in 13 states, First Watch has plans to open 15 locations in 2012, about 10 of which will be company owned, said Pendery. Going forward, the chain expects to add about 20 locations each year, both corporate and franchise operated, he said. First Watch began franchising in earnest in 2011, with franchisees pushing into new markets in the Midwest.

Next year corporate locations are scheduled to open in Indianapolis.

In October, the chain unveiled a new modern interior design for its restaurants with improved lighting, brighter colors, laminate wood flooring and community tables.

Pendery said locations in Columbus, Ohio, have been re-imaged with the new look and the company has gotten very positive feedback.

“We’re really excited about the new image and the new partnership,” he said.

Officials of Freeman Spogli & Co. did not return calls from Nation’s Restaurant News seeking comment about the transaction as of press time.

Alan J. Liddle contributed to this report.

Contact Lisa Jennings at [email protected]
Follow her on Twitter @livetodineout

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