Seafood chains bright spot as restaurant sector struggles

Recently released economic data from the summer is not painting a pretty picture for the restaurant industry in the United States. But despite an overall decline in sales over the past few months, seafood restaurant chains have proved to be insulated from the downturn, and many are even thriving.

The summer downturn in restaurant sales continued in August, with same-store sales falling 0.5 percent, the fourth straight monthly decline, according to MillerPulse.

In addition, foodservice research and consulting firm Technomic found that same-store restaurant sales grew only 0.5 percent, compared to 3.3 percent growth for the second quarter of 2015.

“What is happening in the industry doesn’t necessarily mean that consumers are spending less,” Darren Tristano, president of Technomic, told SeafoodSource. “There are more options in more places for consumers to spend their money…[including] foodservice at convenience stores and supermarkets.”

Plus, the popular home meal kit market, which includes providers such as Blue Apron and Hello Fresh, is growing rapidly and is worth around USD 1.5 billion (EUR 1.34 billion), Tristano said.

As a result of increasing competition, same-store sales at Joe’s Crab Shack dropped 6.8 percent in the second quarter, according to Technomic. Other restaurant chains that serve a lot of seafood dishes also saw sales decline – or slower growth in the second quarter of 2016 compared to the first quarter. Red Lobster and Captain D’s declined to comment on their earnings when contacted by SeafoodSource.

For some seafood restaurant chains, the change is more subtle.

“Rubio’s is doing great, but we have seen softening in sales this year compared to last,” said Ralph Rubio, president of Carlsbad, California-based Rubio’s Coastal Grille, which operates 194 units. “There is instability in the marketplace because of the political situation [the upcoming U.S. election].”

However, some seafood restaurant operators are reporting positive sales growth as they improve their food quality and consumers seek healthier proteins. Same-store sales at Eddie V’s Prime Seafood rose 2.7 percent in the second quarter, and Bonefish Grill reported a slight sales increase of 0.9 percent in the second quarter of this year.

Similarly, Louisville, Kentucky-based Long John Silver’s is experiencing growth this year.

“There are shifts and realities that are impacting many restaurants today. However, we have been running positive, counter to the current downturn trend,” said Marilyn Nicholson, vice president of marketing, media and promotion for Long John Silver’s, which operates and franchises more than 1,000 restaurants in the U.S. “People are eating more seafood and we have a crave-able product. Consumers want great, affordable seafood and we present that opportunity,”

Nicholson said Long John Silver’s is expecting a strong fourth quarter of 2016 because “family meals will be popular.”

Seattle, Washington-based Duke’s Chowder House, which operates six restaurants, is also having a great year.

“We have had a 14 percent increase in sales overall this year and August was particularly good. We are bucking the trend,” Duke Moscrip, founder and CEO of Duke’s Chowder House, told SeafoodSource.

Moscrip believes that Duke's Chowder House’s policy of sourcing 100 percent sustainable seafood is resonating with its guests, particularly millennials. The restaurant company buys salmon from the Copper River, as well as halibut and rockfish from Kodiak, Alaska, cod from Sand Point, Alaska, and wild brown shrimp from the Sea of Cortez.

Duke’s Chowder House has received positive media attention from its sustainable sourcing as well as Moscrip’s cookbook, As Wild as it Gets, and the chain’s support of Long Live the Kings, an organization dedicated to restoring wild salmon and steelhead in the Pacific Northwest.


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