Finance | December 2017 | By Danny Klein

Surging Captain D's Sold to Private-Equity Firm

The seafood chain is growing sales, and units, with a new design.
Captain D's seafood restaurant just opened a Houston venue, continuing a strong run of growth for the fast casual brand.
Captain D's has been sold to a private-equity firm. Captain D’s
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Private-equity firm Sentinel Capital Partners announced Monday that it has acquired 530-unit Captain D’s. Terms of the deal were not disclosed.

“We are very excited to partner with Captain D’s highly experienced and accomplished management team,” said John McCormack, a Sentinel senior partner, in a statement. “Captain D’s holds a unique market position and was recently recognized as one of the top 10 brands in America for consumer loyalty. Captain D’s continues to attract younger guests and is the clear category leader. Moreover, its same-store-sales growth over the past decade is in the very top [quick-service restaurant] tier regardless of category.”

Since being founded, Sentinel Capital Partners has made eight franchise investments in the restaurant business. They include: Border Foods, a leading franchisee in the Taco Bell system; Falcon Holdings, one of the largest Church’s Chicken franchisees; Fazoli’s Group, a franchisor of the leading Italian chain; Huddle House; Newk’s Eatery; Southern California Pizza Company; TGI Fridays; and Checker’s/Rally’s.

Sentinel bought Checker’s from Wellspring Capital in March 2015. The burger chain was sold to Oak Hill Capital Partners for about $525 million in March.

Captain D’s has enjoyed a resurgence of late. The 48-year-old seafood brand reported average unit volumes of $1.059 million in 2016 and systemwide sales of $544.43 million. The brand said units featuring the updated design are bringing in closer to $1.4 million. 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.

This is substantial progress from 2010–2011 when Captain D’s sales fell nearly $3 million alongside the closure of sales 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.

That led to a total brand relaunch that included a new menu featuring grilled, healthier items, and a design that kicks the swashbuckling them for a beach-y, inviting atmosphere.

Read more about the changes here.

“Sentinel’s more than two decades of experience in the restaurant franchising sector makes the firm an ideal partner for us as we enter a new phase of expansion. We see significant opportunities to grow inside our existing footprint as well as into new regions. Our brand has never been stronger,” said Captain D’s CEO, Phil Greifeld, in a statement.

There are currently 227 franchised and 303 company-owned Captain D’s in 21 U.S. states. “Captain D’s provides highly attractive and consistent unit economics for its franchise partners,” says Michael Fabian, a Sentinel partner, in a statement. “This has fueled substantial growth in new franchise sales and openings over the last several years. We look forward to partnering with Phil and his talented team to help accelerate this growth in years ahead.”