First Watch to tap the brakes on unit growth

First Watch has opened more locations than any other full-service brand in recent years. | Photo courtesy of First Watch

First Watch is planning to tap the brakes on new restaurant openings next year, but only a little.

The fast-growing family-dining chain expects to open about 55 new locations in 2027, or seven fewer than the 62 it is opening this year.

During an earnings call Tuesday, executives said the slower pace will improve cash flow and strengthen the balance sheet.

“We can do all of that while maintaining our position as an aggressively growing, full-service restaurant brand, extending our lead in the daytime dining segment and building an even stronger, more durable and financially flexible company,” said CEO Chris Tomasso.

Fewer openings will also allow First Watch to redeploy some of its new-opening teams to help support other fledgling restaurants, added CFO Ashlee Weisser.

Executives said they would share more details about the plan at First Watch’s investor day next week.

No full-service restaurant chain has opened more restaurants than First Watch in recent years. From 2021 to 2025, it added a net of 198 stores, according to Technomic data, going from 435 locations to 633. It currently stands at 681 and is on track to finish the year with 693.

Since 2021, it has averaged annual unit growth of nearly 10%. If it opens 55 stores next year, that would be an increase of about 8% — below its own average, but still significant for a chain of its size.

New restaurants have performed well. Sales volumes at First Watches that opened in 2025 and 2026 are outpacing the rest of the system and the company’s own targets. The company has credited a strong manager pipeline and premium real estate for much of that success.

They have also put some pressure on existing stores. In the third quarter, for instance, First Watch traffic declined 1.9%, which was attributed mainly to “planned sales transfer” as the chain grows.

The reduced unit count should help with some of that, Tomasso said.

First Watch is maintaining its goal of reaching 2,200 restaurants in the U.S. It is still the leader in what it calls daytime dining, which refers to restaurants that serve only breakfast, brunch, and lunch and close in the midafternoon.

Daytime dining has boomed in recent years. And yet after First Watch, the next-largest brand is Another Broken Egg Cafe, which finished last year with 110 locations, per Technomic.

“From our perspective, we have a very significant lead in our category, we’re the undisputed leader in it, and we can still continue to be an aggressively growing concept and widen our lead,” Tomasso said. “But while also focusing on some other aspects of the business that will drive shareholder value.”

Bradenton, Florida-based First Watch delivered a solid third quarter despite what it called a "challenging" consumer backdrop. Same-store sales rose 1%, and came on top of 7.1% same-store sales growth a year ago. That included the 1.9% traffic decline, 3.6% higher prices, and 0.7% lower mix.

Total revenues increased 10.7% to $349.9 million. Restaurant-level margins declined 0.3%, to 19.4%, due to higher food costs. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 16%, to $39.7 million.

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