First Watch Restaurant Group, Inc. (NASDAQ: FWRG) (together with
its subsidiaries “First Watch” or the “Company”), the leading
Daytime Dining concept serving breakfast, brunch and lunch, today
announced it has agreed to acquire 21 of its franchise-owned
restaurants and corresponding development rights in North Carolina
for an aggregate purchase price of $75 million on a cash-free,
debt-free basis, subject to certain customary adjustments.
“Our acquisition of franchise-operated restaurants is an
important part of our long-term growth and value creation strategy,
and this represents our most significant transaction to date,” said
Chris Tomasso, First Watch CEO & President. “We expect these 21
restaurants in one of our key markets will generate average unit
volumes and restaurant level operating profit margins in line with
our Company-owned restaurants and provide us with additional
territories in which to grow organically for years to come. We look
forward to welcoming the teams from these restaurants, who have
served their communities in North Carolina for nearly 10 years, to
our You First culture.”
First Watch’s acquisition of its largest franchisee’s
restaurants is expected to close by the end of April pending
completion of certain customary closing conditions. With this
transaction, First Watch will have acquired 44 total franchised
restaurants across five accretive acquisitions since May 2023. Each
of these acquisitions was subject to a purchase option negotiated
prior to First Watch’s initial public offering. The Company will
provide additional information regarding the transaction when it
reports results of the first fiscal quarter ended March 31,
2024.
In connection with the entry into the acquisition agreement
described above, the Company amended its existing credit agreement
to provide for (i) a new $125 million delayed draw term facility
with 18-month availability for permitted franchisee acquisitions
and new restaurant construction, (ii) a replacement revolving
credit facility with $125 million of commitments (increased from
$75 million previously), and (iii) a new $100 million term loan A
facility, replacing the prior $100 million term loan A facility, in
each case, with substantially similar terms and a new maturity date
five years following the closing date.
“The amended credit agreement provides the
Company with increased financial flexibility. We
anticipate accessing the new delayed draw facility
upon the closing of this franchisee restaurant
acquisition,” said Mel Hope, First Watch Chief Financial Officer.
“We intend to continue our practice of maintaining a conservative
balance sheet and leverage profile.”
Additional details on the amended credit agreement and the
acquisition agreement, including copies of the amended credit
agreement and the acquisition agreement, can be found in the
Company’s Current Report on Form 8-K filed with the U.S. Securities
and Exchange Commission ("SEC”) and accessible on the SEC’s website
at www.sec.gov and the Investors Relations section
of the Company’s website at
https://investors.firstwatch.com/financial-information/sec-filings.
About First Watch
First Watch is an award-winning Daytime Dining concept serving
made-to-order breakfast, brunch and lunch using fresh ingredients.
A recipient of hundreds of local "Best Breakfast" and "Best Brunch"
accolades, First Watch's chef-driven menu includes elevated
executions of classic favorites along with specialties such as the
Quinoa Power Bowl®, Farm Stand Breakfast Tacos, Avocado Toast,
Chickichanga, Morning Meditation (juiced in-house daily), Spiked
Lavender Lemonade and its signature Million Dollar Bacon. In 2023,
First Watch was recognized as the top restaurant brand in Yelp’s
inaugural list of the top 50 most-loved brands in the U.S. In 2023
and 2022, First Watch was named a Top 100 Most Loved Workplace® in
Newsweek by the Best Practice Institute. In 2022, First Watch was
awarded a sought-after MenuMasters honor by Nation's Restaurant
News for its seasonal Braised Short Rib Omelet and recognized with
ADP's coveted Culture at Work Award. There are more than 520 First
Watch restaurants in 29 states, and the restaurant concept is
majority owned by Advent International, one of the world’s largest
private-equity firms. For more information, visit
www.firstwatch.com.
Forward-Looking Statements
In addition to historical information, this release contains a
number of “forward-looking statements” as defined in the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements include, without limitation, information concerning
First Watch’s acquisitions of franchise-owned restaurants and
amended credit agreement, possible or assumed future results of
operations, business strategies, competitive position, industry
environment and potential growth. When used in this press release,
the words “estimates,” “projected,” “expects,” “anticipates,”
“forecasts,” “plans,” “intends,” “believes,” “seeks,” “target,”
“may,” “will,” “should,” “future,” “propose,” “preliminary,”
“outlook,” “guidance,” “on track” and variations of these words or
similar expressions (or the negative versions of such words or
expressions) are intended to identify forward-looking statements.
Forward-looking statements in this press release are based on our
current expectations and assumptions regarding our business, the
economy and other future conditions. Because forward-looking
statements relate to the future, by their nature, they are subject
to inherent uncertainties, risks and changes in circumstances that
are difficult to predict. As a result, our actual results may
differ materially from those contemplated by the forward-looking
statements. Important factors that could cause actual results to
differ materially from those in the forward-looking statements
include the following: one or more closing conditions to the
proposed transaction not being satisfied or waived, unexpected
costs, charges or expenses resulting from the proposed transaction,
uncertainty regarding the Russia-Ukraine war, Israel-Hamas war and
the related impact on macroeconomic conditions, including
inflation, as a result of such conflicts or other related events;
our vulnerability to changes in economic conditions and consumer
preferences; our inability to successfully open new restaurants or
establish new markets; our inability to effectively manage our
growth; adverse effects of the COVID-19 pandemic or other
infectious diseases; potential negative impacts on sales at our and
our franchisees’ restaurants as a result of our opening new
restaurants; a decline in visitors to any of the retail centers,
lifestyle centers, or entertainment centers where our restaurants
are located; lower than expected same-restaurant sales growth;
unsuccessful marketing programs and limited time new offerings;
changes in the cost of food; unprofitability or closure of new
restaurants or lower than previously experienced performance in
existing restaurants; our inability to compete effectively for
customers; unsuccessful financial performance of our franchisees;
our limited control over our franchisees’ operations; our inability
to maintain good relationships with our franchisees; conflicts of
interest with our franchisees; the geographic concentration of our
system-wide restaurant base in the southeast portion of the United
States; damage to our reputation and negative publicity; our
inability or failure to recognize, respond to and effectively
manage the accelerated impact of social media; our limited number
of suppliers and distributors for several of our frequently used
ingredients and shortages or disruptions in the supply or delivery
of such ingredients; information technology system failures or
breaches of our network security; our failure to comply with
federal and state laws and regulations relating to privacy, data
protection, advertising and consumer protection, or the expansion
of current or the enactment of new laws or regulations relating to
privacy, data protection, advertising and consumer protection; our
potential liability with our gift cards under the property laws of
some states; our failure to enforce and maintain our trademarks and
protect our other intellectual property; litigation with respect to
intellectual property assets; our dependence on our executive
officers and certain other key employees; our inability to
identify, hire, train and retain qualified individuals for our
workforce; our failure to obtain or to properly verify the
employment eligibility of our employees; our failure to maintain
our corporate culture as we grow; unionization activities among our
employees; employment and labor law proceedings; labor shortages or
increased labor costs or health care costs; risks associated with
leasing property subject to long-term and non-cancelable leases;
risks related to our sale of alcoholic beverages; costly and
complex compliance with federal, state and local laws; changes in
accounting principles applicable to us; our vulnerability to
natural disasters, unusual weather conditions, pandemic outbreaks,
political events, war and terrorism; our inability to secure
additional capital to support business growth; our level of
indebtedness; failure to comply with covenants under our credit
facility; and the interests of our majority stockholder may differ
from those of public stockholders. For additional discussion of
factors that could impact our operational and financial results,
please refer to our filings with the Securities and Exchange
Commission (the “SEC”), accessible on the SEC’s website at
www.sec.gov and the Investors Relations section of
the Company’s website at
https://investors.firstwatch.com/financial-information/sec-filings.
Should one or more of these risks or uncertainties materialize, or
should any of our assumptions prove incorrect, our actual financial
condition, results of operations, future performance and business
may vary in material respects from the performance projected in
these forward-looking statements.
Investor Relations Contact:Steven L.
Marotta941-500-1918investors@firstwatch.com
Media Relations
Contact:FirstWatch@icrinc.com
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