PE firm’s catch of the day: fast-growing Captain D’s fast food chain

Sentinel Capital Partners has acquired Captain D’s, a seafood restaurant chain, marking its ninth investment in the fast-food sector since 1996.

New York-based Sentinel purchased Captain D’s from Centre Partners, a middle market private equity firm with offices in New York and Los Angeles. Terms of the deal were not disclosed. The Captain D’s chain has 303 company-owned restaurants and 227 franchised restaurants in 21 states. The fast-food sector, also known as quick-service restaurants or QSRs, has outgrown the broader restaurant industry since 2011, according to Sentinel.

“Captain D’s holds a unique market position and was recently recognized as one of the top 10 brands in America for consumer loyalty,” says Sentinel senior partner John McCormick. “Captain D’s continues to attract younger guests and is the clear category leader.” Captain D’s CEO, Phil Greifeld, says that the Nashville-based chain plans to expand both inside its existing footprint--in the Southeast and Midwest--and in new regions.

Prior to the Captain D’s deal, Sentinel had acquired eight other restaurant businesses in the fast-food sector: Border Foods, a Taco Bell franchisee; the Checkers/Rally’s franchisor and operator of the dual drive-through hamburger restaurants; Falcon Holdings, a Church's Chicken franchisee; Fazoli’s Group, franchisor and operator of Italian fast casual restaurants; Huddle House, franchisor of family dining restaurants; Newk’s Eatery, a fast casual restaurant business; Southern California Pizza Co., a Pizza Hut franchisee; and TGI Friday’s, franchisor of casual dining bar and grill restaurants.

Sentinel was the seller in one of the more notable recent QSR transactions. In April, the PE firm sold Checker/Rally’s Restaurants Inc., with 850 restaurants, for $525 million, three years after acquiring the business, to Oak Hill Capital Partners. The PE firm exited its Pizza Hut investment—224 franchisees in Southern California-- in 2012.

Sentinel focuses on investing in lower middle market companies in the U.S. and Canada in aerospace and defense, business services, consumer, distribution, food and restaurants, franchising, healthcare and industrial businesses. Centre Partners targets middle-market investments in the consumer and healthcare sectors.