(Corrects that Freeman Spogli is the seller, not legal adviser, in the last paragraph)

By Lauren Hirsch

July 27 (Reuters) - Private equity firm Advent International has taken a majority stake in cafe operator First Watch Restaurants, the firm announced on Thursday, in a deal sources said values the company between $300 million and $500 million.

The deal highlights the opportunity that investors see in the breakfast category, with loyal diners continuing to buy their favorite breakfasts out, even while opting to eat other meals at home.

The deal valued First Watch between $300 million and $500 million, said people familiar with the situation who were not authorized to share the figures publicly. Advent bought the restaurant from private equity firm Freeman Spogli & Co, which acquired it in 2011.

Advent invested in First Watch because it has attractive menu items and "exceptional" customer service, said Tricia Patrick, a managing director at the private equity firm.

Founded in 1983 in Pacific Grove, California, the business operates under the brands First Watch and The Egg & I across 26 states, with a heavy presence in Florida, Texas, Ohio, Colorado and Arizona.

The 200 First Watch restaurants and 90 The Egg & I restaurants serve breakfast, brunch and lunch until 2:30 p.m. They offer traditional breakfast items like bacon and omelets, as well as trendier, healthy items like avocado toast and quinoa bowls.

Breakfast is the fastest-growing meal in the dining industry. Premium coffee chains like Starbucks Corp have made breakfast out more common. It is also cheaper and quicker than other meals for diners tight on time and money. Diners tend to be steadfast in their breakfast habits, creating a reliable business.

Growth in the industry has attracted investment, most notably by JAB, the investment vehicle of Germany's billionaire Reimann family. Earlier this year, it acquired café chain Panera for $7.2 billion, adding to its empire of coffee and food chains that also includes Caribou Coffee and Krispy Kreme.

Fast-food restaurants have also jumped onto the breakfast bandwagon. McDonald's Corp in 2015 added an all-day breakfast menu, and Yum! Brands Inc's Taco Bell last year added a $1 breakfast menu.

Jefferies and North Point Advisors are acting as financial advisers to First Watch and Freeman Spogli & Co. Morgan, Lewis & Bockius is acting as legal adviser to First Watch and Freeman Spogli & Co.

Weil, Gotshal & Manges is serving as legal adviser to Advent International. (Reporting by Lauren Hirsch in New York; editing by Lauren Tara LaCapra and Cynthia Osterman)