Captain D's signs deal with Houston-based operator

Captain D’s Seafood Restaurant’s renewed franchise development efforts have begun to bear fruit with the signing of a Houston-based multi-unit operator.

Nashville, Tenn.-based Captain D’s has signed an agreement with Michael Knobelock of Houston to buy two corporate-owned restaurants in Hattiesburg and Laurel, Miss., and to build four units in the Houston area.

Knobelock owns 47 Church’s Chickens, 21 Little Caesars and several independent restaurant concepts, as well as three Sears Appliance and Hardware stores.

The 520-unit Captain D’s chain is continuing a turnaround effort under its new owner, private-equity firm Centre Partners, after Sun Capital Partners sold the brand last fall. The new initiatives include remodels and grilled menu items.

“The new look struck me as being more like fast casual,” Knobelock said in an interview. “The fact that guests are served on dinnerware with silverware intrigued me.”

A broader seafood menu that goes beyond typical quick-service fare also attracted Knobelock’s attention.

“The menu now has grilled salmon and grilled tilapia and shrimp skewers, and it doesn’t look like QSR, either,” he said. “Obviously, the battered fish will probably always be the No. 1 item. The trick is going to be to get the customers in and try the grilled items. They are a step above what you’d get in QSR.”

Phil Greifeld, CEO of Captain D’s, noted that the new menu has expanded the concept’s appeal.

“We believe we have unmatched customization opportunities for our guests and a breadth of offerings,” he said, adding that it has increased visit frequency and trial use.

The company’s “Beach Design” remodel project has rolled out in the Birmingham, Huntsville and Montgomery, Ala., markets, and will be extended this year, Greifeld said. It includes booths and communal tables that seat eight to 10 guests. New Captain D’s units will continue to be about 2,200 square feet with 80 to 100 seats.

“When people come to D’s, we’ve found they want to relax a little more and make it a gathering destination,” Greifeld noted.

Knobelock already has units of his other franchised brands in the Mississippi market, he said, but he added that he’s especially looking forward to expanding in his home of Houston, which has seven existing Captain D’s units. In addition, Knobelock has operations in Alabama, Arkansas, Florida, North Carolina, Texas and Virginia.

Greifeld said Knobelock is the type of franchisee the company is seeking.

“He’s a highly successful multi-unit operator,” Greifeld said, “and we’re extremely pleased he’ll be developing new D’s. He epitomizes what we look for.”

Captain D’s currently operates in 26 states, Greifeld said, and the company has targeted Texas, a state where the chain has performed well, for franchise growth. In addition to U.S. units, the brand is on a handful of military bases internationally

Captain D's ended fiscal 2013 with U.S. systemwide sales of $478.6 million, an increase of 2.5 percent from the preceding year. According to Nation’s Restaurant News’ Top 200 research, the chain ended 2013 with 512 restaurants, including 279 company-owned and 233 franchised locations — a decrease of about 1 percent from the end of 2012, when it had 517 units systemwide. Estimated sales per unit were $930,200 in 2013, an increase of 3.2 percent from a year earlier.

“There’s an ample amount of runway space to keep on driving our same-store sales increases and introduce franchise development,” Greifeld said.

Rising commodity costs are not a big concern, he added.

“Relative to people who are using cheese or beef as a key commodity, our food costs have been stable over the last three years,” Greifeld said. “We think we’re in a relative good position on food costs.”

Check averages have grown in the past year and half, Greifeld said, “and it’s not a function of price increases. It’s a function of new initiatives like the fire-grill platform. We’ve expanded our check by offering those new items.”

Captain D’s check average is about $6.95.

Contact Ron Ruggless at [email protected].
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