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First Watch Restaurant Group begins $217.6M IPO roadshow

The operator of First Watch restaurants, a breakfast-brunch-lunch chain, launched its IPO roadshow. Per its S-1 filing with the US Securities and Exchange Commission (SEC), First Watch Restaurant Group will offer 9,459,000 shares of common stock, with a price between $17 and $20, with a valuation of up to $189.2M. The company will be listed on the NASDAQ Global Select Market.

An option has been granted to the underwriters to buy another 1,418,850 shares, with a value of up to $28.4M. First Watch Restaurant Group will use proceeds from the IPO to pay down its debt from credit facilities. Including options, the total valuation could be $217.6M.

First Watch, with sales of $423M in 2019 and EBITDA of $(5.7M), has big plans for expansion. The company has grown from 148 restaurants in 2014 to 423 restaurants as of the second quarter of 2021, with a runway for as many as 2,200 locations, according to an analysis it commissioned. Its penetration is light in the Mountain States, Pacific Northwest and in Alaska.

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Breakfast is a big opportunity in the restaurant space, it noted, as consumers still enjoy 78% of breakfast occasions at home, per data from The NPD Group. First Watch intends to drive home menu innovation, serving up excitement in its successful seasonal offerings, while continuing to focus on its “fresh, healthy” menu, clean ingredients and farm-fresh messaging.

In addition, it plans to expand its adult beverage program, which it has in place in 244 out of 423 restaurants. According to its analysis, alcohol is a profit-heavy initiative that so far has increased average check at alcohol-serving restaurants by $0.30.

[Related article: First Watch readies iPO]

The lead book-running managers for the proposed offering are BofA Securities, Goldman Sachs & Co. LLC and Jefferies LLC. Barclays Capital Inc., Citigroup Global Markets Inc., Piper Sandler & Co., Cowen and Company, LLC, Guggenheim Securities, LLC and Stifel, Nicolaus & Company, Incorporated are acting as book-running managers for the proposed offering.

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Telsey Advisory Group LLC is serving as co-manager for the proposed offering, which is made only via prospectus.

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