Here’s how First Watch got away without price increases in 2021, despite inflationHere’s how First Watch got away without price increases in 2021, despite inflation

Joanna Fantozzi

Florida-based breakfast chain First Watch reported a strong fourth quarter during its second earnings call after going public, with 20.6% same-store sales growth over 2019 and 36.7% growth over 2020. First Watch continues to emphasize its conservative menu pricing strategy — unlike many of the brand’s industry colleagues which have raised prices at least once or twice this year — First Watch chose to keep prices the same and took a 3.9% menu price increase instead in the first quarter of 2022.

“We're afforded the luxury of not having to take a price increase because of our traffic growth,” First Watch CEO Chris Tomasso told Nation’s Restaurant News in an interview following the earnings call, referring to 6.1% traffic growth over pre-pandemic levels. “Even though we didn’t take any price increases, we did see our average check go up because of guest elected pricing. The post-COVID consumer is spending more money because they’re celebrating, and since we’re driving more people to the restaurants, then what’s another 3% increase in price this quarter?”

Tomasso said that unlike much of the rest of the industry, First Watch was able to recover faster from the pandemic as the company returned to positive traffic by March 2021.

Related:First Watch credits Q4 sales growth to being in patrons’ ‘comfort zone’

“Whether it's convenient or not, we like to think that the decisions that we made, both on the menu side and on the pricing side, help drive that that more rapid recovery,” Tomasso said.

Alongside more conservative pricing strategies and traffic growth, First watch’s double-digit sales growth last quarter is hardly a surprise to the still-blossoming breakfast brand that has had 28 consecutive quarters of growth. With 435 locations open by the end of the fourth quarter, Tomasso feels that the rapidly expanding restaurant still has the benefit of introducing new customers to the brand that have never been to a First Watch before.

“I think we're just a concept that that really resonates with the consumer,” he said. “We're introducing more and more people to our brand by increasing our unit growth. We have relatively low brand awareness, so people continue to discover us, and that's why we've been on this on this growth journey for so long.”

Another advantage First Watch had during the many months of COVID recovery was not needing to pare down its menu, which was a strategy many of the quick-service brands had to take as supply chain and labor costs skyrocketed. One of the biggest menu additions First Watch has made was the introduction of an alcohol menu, which was created in early 2021 and has since been rolled out to 70% of its locations, with goals to have it rolled out to the rest of First Watch restaurants by the end of 2022. The alcohol program has also contributed to average ticket lift systemwide.

Related:First Watch raises more than $170M in IPO

“We implemented a seasonal menu strategy a number of years ago, and we've really raised the bar on that every year,” Tomasso said. “So, five times a year, we have the opportunity to introduce seasonal items[…] whether they’re shareable items like our million dollar bacon, doughnuts, cinnamon rolls, our fresh juice program, etc.”

After surpassing the milestone this quarter of three-quarters of a billion dollars in sales, Tomasso said that they keep hoping to pass new sales numbers milestones in the future.

Last quarter First Watch opened eight stores for a total of 435 restaurants across 28 states.

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