Give the Multi-Unit Operators What They Want

Last November Captain D's Seafood announced seven new franchise agreements that will add at least 34 new franchise locations to the system. The largest was with Serve Holdings, led by veteran multi-unit operator Clarence A. Mitchell, III, who bought 20 company stores in the Memphis DMA. He will remodel all 20 with the company's new prototype and develop 15 new stores in the next 5 years. The deal grants Serve Holdings exclusive expansion rights in western Tennessee and three surrounding states (MO, KY, and IL).

The recent signings followed the February announcement of the 32-year-old company's most aggressive expansion effort to date. Captain D's, with 565 locations in 24 states, intends to shift from about two thirds company stores to two thirds operated by franchisees.

Darin Harris, hired in May 2000 as VP of franchise development to grow the brand, says he views the company from the perspective of a multi-unit owner. "What's the reason they're looking to get into a franchise of our type? Most likely, at this level, they're looking to fill out their investment portfolio and a vehicle for doing this just happens to be restaurants and real estate," he says.

"If that's the vehicle, we need to make sure that our opportunity is competitive as far as an economic model and allows a franchisee to achieve the return on investment they desire. That's first and foremost; if you're not competitive there you're not even in the game," he says.

"We have an intense focus on how we continue to make that return on investment better. How do we find ways to lower our up-front investment costs on a new building? How do we make our P&L stronger? What things can we do every year to continue to make that happen in a more competitive environment?"

Freed from the cash-draining burden of Shoney's, and buoyed by record sales increases in seven of the last eight years, the company has rolled out new, flexible prototypes and operational enhancements that include a streamlined kitchen layout, credit card payment options, a state-of-the-art drive-through system, and an advanced point-of-sale system to speed the ordering process. Captain D's also has invested in a new computer-based training system and back-office technology to help franchisees track and manage food costs, labor costs, and inventory.

Number two, says Harris, to attract a multi-unit operator there has to be a cultural fit for both parties. "They must have a like mentality as far on how they approach the restaurant industry. We look really closely at that because that's the start of how we build a long-term relationship. Then, all the other things come into line—the support mechanisms and the things that we can do to help make them more successful."

So what drew Harris to Captain D's? "Most important, the people on the senior team-and not only their dedication. It's almost a cult-like following for the brand, how much they enjoy working at and being a part of Captain D's. You don't see that dedication too often."

He sees Captain D's as a brand with a 30-year history that just needed a few tweaks and enhancements. "It's an exciting opportunity to take a brand that has such a legacy and now start over as a growth vehicle."