Web Exclusive | November 2017 | By Danny Klein

Captain D’s and the Rebirth of Fast Casual Seafood

Like the seafood segment in general, Captain D's was struggling. But a new design, menu, and commitment to quality turned the brand around in a major way.
Captain D's is leading a seafood resurgence in fast casual.
Captain D's has enjoyed same-store sales growth for six consecutive years. Captain D's
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Turn the clock back a few years and imagine this question popping up at the family table: Fast-food seafood, anybody? Unless someone was feeling deep-fried, highly processed items of questionable origin, chances are you would be dialing up the local pizza joint in no time. True or not, that was the stigma facing the seafood segment and its legacy brands around the country.

Captain D's isn't afraid to admit it was one of them. Between 2010–2011, the company's sales dropped nearly $3 million alongside closures of stores nationwide.

In 2011, there were 519 Captain D's locations generating systemwide sales of roughly $433 million. Average unit volumes sat around $832,000. The 48-year-old brand had 531 restaurants and sales of $436 million the previous year.

Understanding there was a disconnect between its mission and its guests, and realizing Captain D's had a long way to go, the brand decided to drastically refresh its business four years ago. It relaunched its brand, unveiling a new restaurant model, logo, and menu. The swashbuckling, dark, nautical theme was ditched for a vibrant, coastal vibe that presents a beach-y, inviting atmosphere. Communal tables were added to encourage family outings and let guests know they could (and should) stick around. Captain D's also rolled out proprietary grilling systems to expand the menu and started featuring better-for-you, grilled options like salmon and shrimp skewers, all cooked to order, and served with fresh vegetables. Even the tableware was updated to reflect Captain D's commitment to quality.

Michael Arrowsmith, chief development officer at Captain D's, says the changes made an impact from day one. It started with a makeover of the Donelson store in suburban Nashville, Tennessee, where the very first restaurant in the chain opened in 1969.

"Most of our customers are looking for an inviting place. They're looking for affordable, good-tasting food. Healthy food. And all those trends are in our favor, in terms of grilled product and healthy," he says. "We had to have a building that reflected that."

At an estimated cost of about $110,000 per unit, the process was understandably going to take some time. All of the new restaurants built in the past three years have featured the look, and the company is in the process of going back and remodeling old ones. Arrowsmith says Captain D's should complete the process some time in 2018.

What have the results looked like? For starters, one of the best indications of current success is future growth, and if franchisees are lining up to put ink to paper. Captain D's has seen a 225 percent increase in new store openings since 2015. In 2017, the brand opened 11 new restaurants and signed 15 franchise agreements to expand in Virginia, Texas, Illinois, Ohio, and Arkansas. There are currently 528 restaurants in 21 states and the pipeline is stuffed, Arrowsmith says.

"We've been able to grow our sales, grow our brand, and that leads to growing more restaurants," he says. "Obviously there's an excitement there with a new product, new look of the building, and financial performance of the stores. We're still growing. We still have a tremendous amount of opportunity in front of us."

Captain D's

Captain D's

Captain D's

Another sign: Captain D's has reported four successive years of record-high AUVs. The new units are currently coming in around $1.4 million. For numbers sake, that's a nearly $600,000 boost over those 2011 figures.

Systemwide Captain's D's sales were $544.43 million in 2016 and AUVs, as an average, were $1.059 million. There were also 516 total restaurants.

Not to mention, same-store sales have grown for six consecutive years.

"If you stop and think about that for a while … it's quite remarkable," Arrowsmith says. "And we're in our seventh year right now of that."

It can't be understated, Arrowsmith says, how crucial it was for Captain D's to become a part of the solution and not a player in the same, old conundrum plaguing fast food. You saw it everywhere, from McDonald's improving its chicken nuggets to fast casual leaders like Chipotle and Panera touting clean menus.

"We felt like in order to remain relevant in the marketplace we really needed to have a healthy, wholesome option," Arrowsmith. The grill began as a test product for Captain D's and instantly resonated with guests. It rolled out chain wide and did more than just fill a menu gap: It placed Captain D's directly into a conversation it wanted to hold court on.

"We're at the forefront of a movement toward fresh, high-quality dining options. And that's what we're able to provide with these products," Arrowsmith says. "We're continuing to test them. We're rolling out different grilled items and seasonings all the time."

Some of these items include Blackened Tilapia, Wild Alaskan Salmon, and Lemon Pepper White Fish. The flavors are on-trend, bold, and don't hide behind coats of breading. This extends to the kids menu as well.

"I think we've elevated the experience from what used to be perceived as a fish-and-chips-type segment to one that could really lead the entire industry in terms of defining what's healthy. We will see the trend continue to rise. I think it's becoming even increasingly more important to provide more options for consumers that are both tasty and in line with a low-calorie diet," Arrowsmith says. "I think that continues to be the appeal that we have as a brand, and I think we're at the forefront of that, and that's going to continue to be the case."

Captain D's has managed to flip the issue. Being a seafood concept is now something Captain D's can leverage to a place most of its competition can't dream of going. Very few quick-service brands in America offer guests a Deluxe Seafood Platter to take home for their family.

It's also desirable for multi-unit franchisees, Arrowsmith says, since owning a Captain D's represents a chance to diversify their portfolio.

"It appeals quite a bit to franchisees looking to expand because we don't directly compete again their other brands; we complement them," he says. It's not another burger, chicken, sandwich, or pizza chain in other words.

Arrowsmith says Captain D's, which is predominantly a Southeastern and Midwestern brand, has plans to continue growing in Texas and then push west from that center. The company will also look at the coastal central part of the East Coast. "You're going to see us push the boundaries of where our brand is. You're starting to see that now if you look at the locations where we're opening. And the brand has been perceived great," he says, pointing to a successful, recent Baton Rouge, Louisiana, opening.

"It's an exciting time to be a part of Captain D's," Arrowsmith adds. "It's an exciting time to be a leader in the health trend, and see where we're going as a culture and as a society. It's great for Captain D's to be a part of it."