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Money on the Menu

[ 0 ] Jan. 1, 2010 | SBO Editor

Ken Pendery Jr., president and CEO of First Watch , Inc., doesn’t mind sitting down and talking about his 80-restaurant chain that spans 11 states, but he would much rather be sitting in a First Watch dining room, having a cup of coffee with the general manager and learning what’s working and what’s not.

“I’m an operator at heart,” says the Kentucky native, who spends half of each month on the road, visiting 15 to 18 restaurants, including eight in two days on a recent trip to Kansas City. “I go to work every day with our management team and employees. We skin our knees some days, but I focus on our people and customers. That’s my comfort zone.”

For the last 26 years, things have been working very well for First Watch, the largest and fastest growing, daytime-only restaurant company in the United States. The privately owned company has enjoyed positive same-store sales growth every year and, in a battered economy same-store sales are up five percent over the same period last year. Systemwide sales in 2009 are expected to be $85 million, with average unit volume an impressive $1.2 million.

With more than 70 of its restaurants company-owned, First Watch is offering key multi-unit regional franchises to experienced restaurateurs in new markets in 35 states throughout the continental U.S. By the end of 2012, First Watch expects to grow to 110 locations, with about a dozen franchised locations open and more than 30 in various stages of development.

“My plan has always been to have the corporate operating model as strong as possible, so when the day came to franchise, we were as well-prepared as we could be,” said Pendery.

The Florida-based leader in the breakfast-brunch-and-lunch industry is seeking investors to develop at least three restaurants in a territory. The chain flourishes in markets such as Kansas City (10 locations), St. Louis (8), Orlando/Tampa (11), and Cincinnati/Dayton (13), where it quickly builds a loyal customer base.

We find our best success in markets where there is an economy of supervision and the opportunity to build brand awareness that helps drive the success of what we do and who we are,” Pendery said.

First Watch has set the standard for daytime dining since its inception in Pacific Grove, California, in 1983. With industry surveys showing more people eating breakfast than ever before, First Watch is well positioned, as consumers seek freshly prepared traditional favorites, unique and bold flavors, as well as healthier offerings.

The First Watch business model has inherent advantages. The daytime-only concept – First Watch is open from 7 a.m. to 2:30 p.m. – helps retain employees. The company’s 50 percent turnover rate for management and hourly workers combined is well below the industry average. Cross-utilization of food products keeps costs low, but still allows First Watch to offer about 60 menu items. There are no deep fryers and alcohol is not served.

“There are a lot of factors that are compelling, not the least of which is the potential return on investment,” said Chris Tomasso, chief marketing officer for First Watch. “Ironically, First Watch is most attractive to those in the industry who understand the significance of some of the things First Watch is able to do that can’t be accomplished at most other restaurant concepts.”

For those who question how First Watch can afford to look past the additional revenue that would come from extended hours, Pendery offers a quick response.

“If some of the major casual dining chains open for breakfast, I guess I’ll consider opening for dinner,” Pendery said. “By being daytime-only, we are able to keep our management and employees focused on doing what we do best. I don’t feel we would be nearly as good at what we do if our hours were different.” •nsultants use their experiences to build very successful businesses for themselves.” •

Web site: www.firstwatch.com

Ken Pendery Jr. has lots to be happy about now that his First Watch Restaurant chain is enjoying a booming success. The average unit volume for each store in the chain is $1.2 million and that’s just for serving from 7 a.m. to 2:30 p.m. The daytime-only concept, he says, helps retain employees.

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Category: Magazine, Small Business Opportunities, Small Business Opportunities Jan 2010