This article focuses on the flow patterns and pressure drop of a two-phase air-water mixture in plate heat exchangers (PHEs) that include grooved copper foam inserts. The objective is to advance the design of compact heat exchangers operating under two-phase flow conditions to enhance thermal management and reduce pressure drop. A transparent cover plate is specifically designed to observe flow patterns across a range of gas and liquid superficial velocities ranging from 0.079 to 2.8 m/s and 0.079 to 0.32 m/s, respectively. Visual observations captured by digital and video cameras identify two flow patterns: bubbly flow and churn flow. These flow patterns and their transitions are substantially altered by the insertion of copper foam in PHEs compared to conventional PHEs. Insertion of copper foam in a PHE increases pressure drop. However, this effect can be mitigated by cutting grooves into the copper foam structure. When grooved copper foam is inserted into a PHE (PHE_GCF), the pressure loss is reduced by approximately 48.0% and 59.3% for groove widths of 4 mm and 6 mm, respectively, compared to the pressure drop of a PHE with copper foam (PHE_CF) inserted. New correlations are also created for PHEs, PHE_GCFs, and PHE_CFs to offer practical applications and valuable information for PHE design.