Captain D’s continues its domination in the fast-casual seafood segment with a brand-new look, new franchise agreements to open 75 restaurants, and more on the way.
Interview By Katie Lee
Captain D’s is enjoying an enviable growth position. The cycle goes something like this: Captain D’s creates a goal to grow its store count by X number of stores, then surpasses that goal by a long shot, then plans to grow even more the following year. In 2014, the company signed franchise agreements for 35 new restaurants; today, in 2015, they expect to sign agreements to open 75 new locations. As of press time, construction was already underway to open 12 new locations by the first quarter of 2016. And it’s not just about new restaurants — Captain D’s is rolling out a whole new look, too. Restaurant Facility Business recently interviewed Michael Arrowsmith, chief development officer, about the big wave of changes.
RFB: How many restaurants does Captain D’s operate today? Are there any U.S. markets Captain D’s is targeting or has not yet penetrated?
Michael Arrowsmith: With 512 restaurants, Captain D’s is the fast-casual seafood leader and Number 1 seafood franchise in America ranked by average unit volume. [New restaurants are averaging $1.6 million in sales.] We are currently targeting markets in the Southeast, Midwest and the state of Texas.
RFB: How many new locations (total) opened in 2014, and what is the growth forecast for 2015 and 2016?
Arrowsmith: Eighteen months ago, we began both a franchise development and company restaurant development program and in 2014, signed agreements to open 35 new restaurants. We expect 75 this year and construction is underway to open a dozen new locations by the first quarter of 2016.
RFB: Tell me a little about the history of the company and why 2015 has been such a pivotal year.
Arrowsmith: Captain D’s has been serving customer for nearly 50 years. 2014 was a year of tremendous growth for us. It marked the company’s fourth consecutive year of same-store sales growth, we signed franchise agreements to open over 35 new restaurants, opened our first new corporate location in a decade, and generated half a billion dollars in system-wide sales. So far this year, we are on target to surpass each of those accomplishments.
Today, Captain D’s is at the forefront of a movement toward fresh, high-quality, and healthier dining options. Our newer products, our refreshed look and, most importantly, the hospitality provided by our team reflect what our customers are telling us they want. Our new unit growth is driven primarily by the great economic returns our franchisees are receiving when opening these new locations.
RFB: To what do you attribute Captain D’s 4.94% same-store sales growth in the first quarter of 2015?
Arrowsmith: It’s not just one thing, although our new “D-Lite Meals” featuring five meals under 500 calories is certainly a leading cause. Our new restaurant design, which exudes a vibrant coastal atmosphere, complete with plateware and silverware, provides the experience our customers are telling us they want. Our success has been driven by listening to our customers and delivering to them the menu options, atmosphere, and most importantly, the service they deserve.
RFB: Captain D’s recently opened its first corporate location in a decade — does the company expect to open more corporate locations or remain mostly franchised? (What percentage of corporate vs. franchised is the goal?)
Arrowsmith: Our growth strategy includes growing the brand with both franchised and company owned locations. Some other franchise brands are selling company owned locations, and asking only their franchisees to build new locations. We don’t share that perspective. We don’t ask franchisees to do anything we’re not willing to do — including investing capital into growing the brand. And given the returns we’re seeing from our new store openings, why wouldn’t we? That said, we are continually seeking new franchisees to join us in our crusade to grow faster and serve our great products to more consumers in more areas.
RFB: Please discuss the new “coastal theme” prototype and its improved efficiency. What architectural, design, operational elements make it better than its predecessor?
Arrowsmith: Today’s customer is looking for a fast-casual experience with high-quality food at an affordable price, and in a comfortable atmosphere to suit their needs, whether dining alone, with a friend, or the whole family. The redesigned restaurants offer new seating options for groups of six or more. Additionally, we upgraded the dining experience with washable plates and silverware, and recently installed a new grilling system, proprietary to Captain D’s, which has flames from both the bottom and the top to ensure quality and quick grilling.
RFB: Have any stores currently open been upgraded to the new look, or just new builds? What’s the rollout schedule look like?
Arrowsmith: 175 restaurants have been remodeled and we anticipate that by the end of 2015, 51% of the system will be remodeled.
RFB: What kind of feedback are you getting from the new look?
Arrowsmith: We have received very positive feedback from our customers and this is one of the reasons for our record-breaking sales. Today’s fast-casual customers, regardless of income level, want a better experience than the fast-food customer of yesteryear. Many of our customers are looking for an inviting place to share an affordable, good tasting and healthy meal with friends or family.
RFB: What is an average square footage for a Captain D’s restaurant?
Arrowsmith: Our traditional prototype restaurant is 2,804 square feet.
RFB: Describe how Captain D’s handles repair and maintenance. Do you have an in-house maintenance department or do you rely on vendors? Or do franchisees handle R&M individually?
Arrowsmith: We do not have an in-house facilities department and use high-quality outside vendors for most of our repairs and maintenance.
RFB: Do you use local or national vendors? Why?
Arrowsmith: We use a combination of both local and national vendors for our facilities repair and maintenance.
RFB: What do you enjoy most about your job day to day?
Arrowsmith: My favorite day-to-day activities are meeting new franchisees, visiting potential real estate sites and focusing on how we can continue to grow this brand. It is incredibly energizing. However, nothing beats opening new restaurants! The crowds, the energy, the excitement — it’s the culmination of a lot of hard work by a lot of talented people. The real payoff is seeing the look on our customers’ faces when they try our products for the first time. Watching our brand really take off and grow in new areas and markets is an exhilarating experience.
RFB: What goals have you set for your team, short term and long? Five years from now?
Arrowsmith: Our primary objective is to continue identifying better, faster ways to grow this brand in a high-quality and successful manner. We currently operate in 26 states without being fully penetrated in any of those states — a tremendous opportunity for our brand. And we are not stopping there! We are continually looking not only for great real estate sites, but especially high-quality, new franchisees to join us in our crusade to grow faster and serve our great products to more consumers in more areas.
— This article originally appeared as the August/September 2015 cover story of Restaurant Facility Business magazine. Email the editor at [email protected].