« April 2005 Table of Contents
One on One - Paul Hubbard
Franchisee, Captain D's
April 01, 2005
Franchising is in Paul Hubbard’s blood. His first foray into operating a chain restaurant was at a Detroit Burger King 25 years ago. His next franchise move was as partner in a Little Caesar’s franchise in Seattle. He got involved with the Church’s Chicken franchise four years ago and now has three in the Toledo area.
His most recent venture into franchising is with the Captain D’s fast-casual-dining seafood chain. Hubbard opened Toledo’s first Captain D’s on Feb. 21 at 2060 West Laskey, and has plans to open eight more in the area over the next four years.
The seafood chain, with headquarters in Nashville, Tenn., anticipates opening a total of 20 franchise locations this year. The company operates and franchises 580 restaurants in 23 states.
Hubbard operates the Toledo Captain D’s franchise as part of the Nautical Treasures operating company, of which he is president. Hubbard plans to open another Captain D’s franchise in Detroit in the fall, which will be the first company store in Michigan. That franchise will operate under the Alpha Restaurant Group, of which Hubbard also is president.
Hubbard’s entry into restaurant franchising in the Midwest comes on the heels of a stint as economic-development director for the city of Toledo.
His Church’s Chicken franchise operations have reportedly revitalized portions of the city and may explain how and why Hubbard has chosen his Captain D’s franchise locations in both Toledo and Detroit.
“Paul’s commitment to Toledo, and to revitalizing the area’s neighborhoods through the development of Captain D’s restaurants, makes us proud to have him as a franchisee,” says Bill Nelson, vice president of franchise operations for the chain.
“We know he is going to have a tremendously positive impact on our system.”
Hubbard graduated from Ohio University in Athens, Ohio, and holds a master’s from Wayne State University in Detroit and completed post-graduate studies at Harvard’s John F. Kennedy School of Government.
He serves on the board of directors for both Grand Valley State University in Allendale, Mich., and Marygrove College in Detroit.
I spoke with Hubbard in mid-March before he left on a vacation to China.
Robinson: How did the store opening in Toledo go?
Hubbard: We did $35,000 in sales the first week. That week was also the President’s Day holiday. The store averaged 400 to 500 customers per day. That’s probably on the high side of average. Most restaurants open in the $20,000 range; some are in the $50,000 and $60,000 range. You can have a successful restaurant doing $18,000 to $19,000 a week.
How did this opening go compared to others you have done?
There was no difference. Church’s Chicken opened a lot stronger, but it was due to pent-up demand, because there hadn’t been a Church’s here in several years. Compared with Burger King and Little Caesar’s, Captain D’s opened stronger. A lot of people were waiting for it. Everyone who has traveled south is familiar with [the chain]. They had wondered why it wasn’t here.
Why did you decide to open a Captain D’s in the area?
There wasn’t any seafood in Toledo that was for the average working person. Captain D’s to me is a cross between Long John Silver’s and Red Lobster. It’s better than Long John Silver’s, but not as upscale as Red Lobster. But our menu prices are a lot cheaper than Red Lobster. Toledo is a working-class city, so [Captain D’s] appeals to this market.
When [health educators] are looking at making people more healthy and health-conscious, they always talk about seafood and fish. Chains like Church’s and Captain D’s are going along with the health-conscious ideology. All the food is baked and broiled.
Everything in life has its time, and now Captain D’s seafood is going along with the country’s mood as far as healthy eating.
Is franchising a family business?
My son, Paul Hubbard Jr., is general manager of the Captain D’s. He has a college degree and a six-week certification from Captain D’s. I’d like to see him move up and run the operations for me.
How did you handle marketing for the new franchise?
In Toledo we market on four radio stations and television and in two African-American newspapers and the daily paper. We will probably do the same in Detroit. [Captain D’s] has ads that we use — we pay a certain amount of money to Captain D’s to develop ads.
What’s a day like in the life of a restaurant franchisee?
I get up around 7 a.m., return phone calls from the previous day. Then I go through paperwork, do invoices for both restaurants and answer mail regarding the startups for Detroit. At 10 a.m. I go to Captain D’s and spend one hour there. Then I go to Church’s for another hour; then to the health club for an hour, back to both restaurants and then home. Then I go back out in the evening and do the restaurant rounds again, talking to customers and seeing what’s going on.
What is the greatest challenge that franchisees face, regardless of the concept?
Keeping employee theft down and having the right kinds of controls over [theft]. Employee theft can normally be 4 percent; you never will contain it totally. It can go up as high as 10 to 20 percent. It can eat up all your profit.
It’s not only money, but someone ordering a $3.99 meal and getting $20 of product. It’s employees at cash registers who ring up a drink and give someone a $5.99 order of food. It’s also employees who put raw product in the garbage and take it home at night. [Theft] shuts some restaurants down. It almost happened
to me once [at Church’s], but we got a handle on it.
Someone at Church’s [Chicken] told me 88 percent of everybody working at restaurants will steal; it’s only about 12 percent who are honest, because they are openly religious.
Aside from theft, what is your next hurdle as a franchisee?
The second challenge is keeping food and labor costs around 30 to 31 percent. Managers tend to over-schedule to have enough help. Food waste and cooking inappropriately can take food costs up.
The drive-thru has Captain D’s new Fast Track timing system. What does this entail?
The drive-thru has a bigger menu board where customers order, and there are two people working the drive-thru, compared with one before. [Drive-thru] time is about 2 minutes.
If the drive-thru is backed up, customers will drive in and right back out. Sixty percent of sales is through the drive-thru.
What else is new in the Toledo restaurant design?
The kitchen is redesigned to let people see the food being prepared. It is a T-shaped, open kitchen. The psychology is that a lot of people like to see what’s going on.
You can see everything and you have more space. The people in the back can communicate with the cashiers and expediters a lot better. It also cuts down on employee theft in terms of giving away too much food.