Charting the Waters
Veteran and upstart seafood concepts seek to boost their standings on the chain landscape.
Buoyed by capital from new ownership, Captain D?s (above) plans greater franchise growth, while Phillips Famous Seafood (below) retools menu items and prices.
Seafood operations old and new are casting a wider net as diners warm to the bounty of the sea.
Thanks to a confluence of factors including more-sophisticated consumer palates and advances in aquaculture, seafood?s popularity has swelled in recent years and with it, restaurateurs? efforts to meet the demand.
?A level of sophistication and understanding has brought middle- and upper-middle-class consumers into regular seafood consumption and a high degree of comfort with the products,? says Bryan Elliott, an Atlanta-based restaurant analyst with Raymond James & Associates of St. Petersburg, Fla. ?More importantly, on the procurement and availability side there have been significant advances that allow restaurants to be pretty competitive from a menu-pricing standpoint.?
Per capita consumption of commercial fish and shellfish grew 4.5% in 2003 on top of a 5.4% increase in 2002, according to the most recent data from the National Oceanic and Atmospheric Administration?s National Marine Fisheries Service. R&I?s 2003 Menu Census shows that 47% of restaurant operators have at least one seafood entrée, while upward of 75% menu some type of seafood.
Experienced players such as Nashville, Tenn.-based Captain D?s and Orlando-based Red Lobster continue to evolve with the times as their newer competitors arrive armed and ready to tackle traditional obstacles facing seafood-specialty chains: sourcing and obtaining consistently fresh, quality product; setting acceptable price points; training staff to handle highly perishable inventory; and overcoming veto votes.
Percent of consumers who say they have ordered a fish entrée in the previous 12 months.
(R&I 2004 Tastes of America Study)
Elliott discounts the notion that customers shy away from chain seafood, and the category?s latest entrants concur, viewing the lack of national seafood concepts as an opportunity to test the waters across segments, from fast casual to high end.
?Fish is an item people don?t like preparing at home as much as they like it eating out,? says Co-owner Michael Dellar of San Francisco-based Lark Creek Restaurant Group?s decision to replicate its casual seafood concept Yankee Pier, where entrée prices range from $9.95 to $18.25. ?Our restaurant fills a gap for high-quality seafood in a casual table-service environment at popular price points.?
Recently purchased by private-equity firms Grotech Capital Group and Charlesbank Capital Partners, 36-year-old quick-service chain Captain D?s is embarking on a new era of franchise growth and reimaging. President and Chief Operating Officer Ron Walker, a 20-year company veteran, serves as witness to the seafood segment?s evolution. Among changes he has observed is a gradual shift to a greater variety of seafood and other proteins. And while fried fish remains Captain D?s top seller?and a popular item across almost all seafood chains?grilling, broiling and blackening are prominently featured at many concepts.
Owner Phil Roberts hopes to grow The Oceanaire Seafood Room into "the Morton's of seafood." At Up the Creek, combination plates like the Mixed Seafood Grill (below) are the most popular options.
Chef-driven menus with location-specific specials and raw bars that showcase fresh product often are options of choice at upscale and upscale-casual chains, including Yankee Pier, Columbus, Ohio-based Mitchell?s Fish Market and Minneapolis-based The Oceanaire Seafood Room. ?When you?re handling a delicate product you?d better have somebody in the kitchen who is highly skilled and highly professional,? says Oceanaire Founder and Chairman Phil Roberts, noting that guest expectations rise along with check average, which is $55 at his seven-unit concept. Raw bar selections typically include daily oyster lineups (up to a dozen choices on a given night at The Oceanaire), clams, shrimp and crab cocktails and even ceviche (at Yankee Pier) and caviar service (The Oceanaire).
To appease nonseafaring diners, items such as steak, chicken and pasta are built into most chains? menus. ?We knew going in that there is a veto vote on fish,? says Bill Palmer, Applebee?s founder, and creator and president of 10-unit casual-dining chain Up The Creek Fish Camp & Grill based in Duluth, Ga. ?We planned for it through diversification of the menu.?
In the fast-casual arena, where a big name in seafood has yet to emerge, companies including Baltimore-based veteran Phillips Seafood and Atlanta-based Raving Brands face uphill climbs in their quests to offer faster service and moderate prices while conveying a high-quality image.
Entrée prices at the four-unit Phillips Famous Seafood range from $3.99 to $8.99 for such choices as clam strips, steamed spiced shrimp and grilled ahi tuna sandwiches. Although previous plans targeted rapid expansion, the company recently has sought to rid itself of two leases it signed for new restaurants, according to the Washington Business Journal. Company officials told the newspaper that growth currently is on hold as they refine the concept, adding more traditional Phillips menu items and reducing higher prices to the $6 to $7 range.
Sales by the full-service seafood restaurant category in 2003, accounting for about 5.3% of total full-service sales.
Despite the apparent challenges, Raving Brands (parent of Moe?s Southwest Grill and Mama Fu?s Asian House) remains optimistic about prospects for Boneheads Seafood, set for a summer debut with 10 franchises already sold. The menu will feature four to five grilled-to-order fish options as well as sandwiches, salads and fish tacos, says Executive Vice President Darin Kraetsch.
Some industry observers are skeptical that quality seafood can be served at quick-service or fast-casual price points, and though Kraetsch won?t reveal how Boneheads plans to maintain its targeted $8.50 check average, he suggests that consumers historically have overpaid for fresh fish. ?We?re going to make it affordable. We could quadruple the margins by raising prices, but we?re not going to do that,? he says. To stave off the veto vote, the chain also will serve peri-peri chicken, flavored with the fiery African chiles and carved to order.
Price It Right
As a startup, Boneheads will pay suppliers spot prices for product in the beginning but hopes to establish contracts as quickly as possible, Kraetsch says. Given pricing and supply volatility of nonfarmed seafood, contracts are often a business necessity for chains such as Captain D?s, Red Lobster and Up The Creek Fish Camp & Grill. For growing chains, contracts also help create solid relationships with vendors that help set the stage for expansion, notes Stan Klaus, executive vice president of Up The Creek.
Yankee Pier?s lobster roll joins a casual-dining menu that ranges from fish and chips to whole lobsters.
Paying spot prices offers operators such as The Oceanaire, Yankee Pier and Tampa, Fla.-based Monstah Lobstah flexibility but also makes them vulnerable. ?Right now the price of lobster is through the roof. It?s killing me,? says Allen Berube, owner of three-unit Monstah Lobstah, with two quick-service units and one casual-dining location.
Berube purchases about 2,000 pounds of lobster each week from a New Hampshire distributor (he sells about a quarter of his purchase to other local restaurateurs) and is setting up his own distributorship in Maine to take over the wholesale end. His plan: Prepare a franchise model for Monstah Lobstah and eventually sell product to his own franchisees.
For the majority of operators who opt not to take sourcing into their own hands, establishing solid relationships with fishermen, suppliers and distributors is the only way to ensure consistent, quality seafood. Guaranteeing freshness means frequent deliveries.
Captain D?s brings in frozen products twice weekly, while fresh fish arrives daily?sometimes two to three times?at Oceanaire locations. Yankee Pier and Boneheads also receive never-frozen seafood every day, while Monstah Lobstah gets live lobsters three to four times weekly and Up The Creek brings in fresh and frozen products two to three times per week. ?In the past consumers were frightened about the distribution system,? says The Oceanaire?s Roberts. ?The other day we got an e-mail from a fisherman who caught a giant tuna off the Canary Islands. By night that fish was in Amsterdam and then it was flown to Minneapolis and on the menu the next night. We?ve absolutely got it nailed.?
Like steakhouses, seafood-specialty restaurant concepts seek to stand apart with creative menu offerings. A sampling of dishes chains use to lure diners:
Bacon-wrapped sea scallops topped with mango salsa; pistachio-Parmesan-crusted rainbow trout with artichokes and basil-lemon butter
Bonefish Grill, Tampa, Fla.
Baked jumbo soft pretzel with cheesy crab topping; whole steamed crab stuffed with jumbo lump crab cake, beer-battered and fried
Crabby Dick?s, Fells Point, Md.
Fishmonger Bouillabaisse of assorted seafood with tomato, saffron, fennel, potatoes and aioli crouton
Fishmonger Seafood Grill, Atlanta
Crispy Kung Pao Calamari with chopped peanuts, green onions and red chiles; banana-crusted Island-Spiced Tilapia with sweet sticky rice, broccolini, mango vinaigrette and tropical salsa
Mitchell?s Fish Market, Columbus, Ohio
Mexican Shrimp Martini with avocado and tomato salsa; seafood enchiladas with shrimp, scallops and mushrooms, topped with crawfish and roasted-ancho cream sauce
Rockfish Seafood Grill, Dallas
Baked grouper fillet topped with creamy green sauce and pepper Jack cheese served on bed of Cajun wild rice; grouper ?Grouben? with Swiss cheese, sauerkraut and Thousand-Island dressing on grilled rye
Up The Creek Fish Camp & Grill, Duluth, Ga.
Ahi tuna and New Zealand grouper ceviche with tropical fruit, avocado mousse and corn crackers with sea salt
Yankee Pier, San Francisco