Captain D’s CEO Phil Greifeld believes that Sentinel Capital bought his chain at the perfect time.
The Nashville-based operator of more than 500 quick-service seafood restaurants has had seven straight years of same-store sales growth. And Greifeld says the company is on its way to its fifth consecutive year of record average unit volumes.
But the chain is now accelerating its unit expansion, with 32 unit openings planned for 2018, 35 the year afterward and 40 in 2020.
By comparison, the 530-unit chain added just five units in 2016.
“We are at an inflection point,” Greifeld said in an interview. “We’re in an aggressive growth mode right now, having internal as well as external franchisees grow with Captain D’s. Looking out for the next seven years, we see more of the same, but also with a higher new unit growth trajectory.”
The company will have a new private-equity partner in Sentinel that is familiar with the restaurant business. It has made nine acquisitions of restaurants, both brands and franchisees. This year it sold Checkers/Rally’s, but it owns chains like Fazoli’s and Newk’s Eatery. Sentinel acquired Captain D’s through an auction process.
“They are a terrific group of people,” Greifeld said. “We’re happy to have them as partners.”
The sale, he said, demonstrates the ability for the chain to keep growing its business, which is creating value to shareholders and confidence in the management team.
Sentinel is Captain D’s third private-equity owner over that seven-year period.
The management team, however, will remain intact. “We’ve had a historic run,” Greifeld said. “And if you look at our position in the market, and the landscape of the restaurant industry, we feel like we have an ample amount of white space to capitalize on that position.”
The chain set about to align the company behind the goal of improving operations. While Captain D’s remodeled restaurants and improved the quality of the menu, all of which helped bolster sales, Greifeld said the organizational focus was the key element in its run.
“When you marshal the collective resources of an entire organization in one direction and you put the guest at the forefront of all of your initiatives, strategies or tactics, powerful things can happen,” he said. “When that message permeates the entire organization and reaches out into the field, we can move brands in powerful direction.”
One thing the chain is moving on is delivery. The company launched delivery just a month ago, and Greifeld is clearly excited about the service.
“It’s been incredibly well-received in the marketplace,” he said. He added that the chain is well-positioned to take advantage of the service because a lot of its business is takeout, and most of that is consumed either at home or in the office.
So while he wouldn’t say how much delivery improved sales, he said it now represents “very strong single digits of overall mix.”
“It’s just getting started,” he said.
It’s a service that should help the chain continue its run of strong sales, which could help further unit growth in the coming years.
“We feel like we’re just getting started,” Greifeld said. “This is just another milestone in our successful brand journey. We’re confident the next seven years will be stronger than the past seven years, based on all the initiatives we have in place.”