Captain D's turnaround efforts gaining traction

Five months after the Captain D’s Seafood Restaurant chain swapped private-equity owners, efforts to transform the 45-year-old brand are gaining traction.

In an interview with Nation’s Restaurant News, Captain D’s chief executive Phil Greifeld said the Nashville, Tenn.-based chain had a record year in 2013, with average unit volumes nearing $1 million — the highest since it was founded in 1964 — and same-store sales rising 3.2 percent, lapping an 8.5-percent increase in 2012.

Those same-store sales increases are largely attributed to increases in traffic, he said.

Even through the frozen months of January and February, Greifeld said same-store sales remained positive for Captain D’s, and 2014 so far is showing a 12-percent same-store sales increase year-over-year.

Greifeld said the 520-unit chain is gaining momentum after the company began a turnaround effort in 2010 under former owner Sun Capital Partners Inc. In October 2013, Sun Capital announced an agreement to sell the chain to private-equity firm Centre Partners.

Transformation initiatives have included the rollout of new broilers to all restaurants, allowing the addition of a grilled seafood platform that appeals to health-conscious guests who have moved away from fried seafood.

Greifeld declined to reveal how much grilled products represent in sales, but the mix they represent on the menu has doubled over the past two years, indicating that guests are embracing the new offerings.

Last year, Captain D’s locations in three key markets in Alabama — Birmingham, Huntsville and Montgomery — were remodeled with a new beach-inspired design that highlights the brand’s more fast-casual positioning.

Greifeld argued that Captain D’s has always been fast casual, but is often called quick service because of its drive thrus.

“But when you look at the service model and the environment, the facilities, the customization opportunities and that the menu is cooked to order, it’s fast casual,” he said. “We’ve further highlighted those positive attributes to communicate that.”

Remodeled restaurants are averaging a 5-percent to 10-percent sales lift and have sparked new trial, he said. About 70 restaurants within the system have been remodeled, and 100 to 125 company locations are expected to see the refresh before the end of the year, Greifeld said.

The new beach-design restaurants have average unit sales of about $1.6 million, said Greifeld.

Late in 2013, Captain D’s also relaunched its franchise development program after what Greifeld described as “a long absence.”

Though he declined to give specifics, Greifeld said new restaurant openings this year will be in the high single digits, including some company-owned locations. Four new restaurants opened in 2013, of which two were “scrape and rebuilds” with the new design.

“We’re being highly selective,” said Greifeld. “We could go higher than that, but we want to start off with quality units.”

Given the growth prospects, Greifeld is confident new franchisees will take a look at the new Captain D’s.

“We’re unique,” he said. “We own the fast-casual seafood space. The economics are strong and there’s powerful momentum in the business.”

Contact Lisa Jennings at [email protected].
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