Luke’s Lobster opened its first shack in 2009 in New York’s East Village. The idea came about six months earlier, when owner Luke Holden was sitting at his desk at his investment banking job, looking for a good lobster roll in the city and coming up short. As a native Mainer, Luke was used to getting an affordable, fresh, super high quality lobster roll served in a fast casual environment, not an expensive meal served over a white tablecloth. Luke decided then that there was an opportunity to fill that void and Luke’s Lobster was born.
In this interview with Luke Holden, owner of Luke’s Lobster, he shares how owning the supply chain has helped ensure access to quality ingredients, how sticking to their core brand values set themselves up for success and why building the right team is essential to scale your business.
Owning the Supply Chain to Control Quality
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Luke Holden grew up in Maine, where his father was a former lobsterman who became a dealer and then a processor of lobster. Luke teamed up with his father to begin bringing high quality Maine lobster, crab and shrimp down to the first Luke’s Lobster shack in the East Village.
“My mission out of the gate was not to have a restaurant group and that’s changed dramatically,” says Luke Holden, owner of Luke’s Lobster. “The motivation from day one was to share a little bit of what I grew up with exclusively in the East Village. From there I realized that there’s a much bigger market that we have the opportunity to bring this authentic experience to.”
Less than a year later, they opened their second New York location and knew that the concept was about to take off in a big way. Due to their rapid expansion, Luke’s Lobster quickly outgrew using his father’s business to source their seafood. Instead of looking for another lobster source that could handle their volume, Luke decided to start Cape Seafood, a state of the art seafood company that interacts directly with the fisherman to bring in lobster, crab and shrimp and cooks, packs and ships the seafood directly to Luke’s Lobster restaurants.
“We grew pretty quickly from one shack to six shacks and decided that we needed to own the procurement and production side if we’re going to continue to grow,” explains Luke.
There are advantages and disadvantages to vertical integration, and Luke has experienced both sides with Cape Seafood. In terms of the disadvantages, Luke’s Lobster was forced to be Cape Seafood’s best customer – which can be an advantage and disadvantage at the same time.
“For the first several years of Cape Seafood’s life we did not have scale, so that meant that the seafood that we were selling back to the restaurant group was a little bit more expensive than we could have bought on the open market,” explains Luke.
So not only were the products a bit more expensive, when Cape Seafood was just starting out Luke had to shift a lot of his focus to building and developing that side of the business. That meant they had to restrict growth within the restaurant group and take a step back in order to ensure that Cape Seafood was equipped to handle supplying Luke’s Lobster in the future.
The advantages? Really great, uncompromising quality.
“We are our own best customer so we make no sacrifices on quality,” shares Luke. “We have complete transparency and traceability from trap to table because we are literally in control of the product from the wharf to our guests plates.”
This allows Luke’s Lobster to be confident that they are well above industry standards in delivering consistently high quality seafood directly to their restaurants. This focus on quality is one of Luke’s Lobster’s core brand values, and something that Luke works extremely hard on to make sure they are leading the industry when it comes to quality, sustainable seafood.
One of the challenges of providing that type of industry leading quality is translating it to guests. Luke’s Lobster has a high price point when compared to most of the fast-casual restaurant industry – a $14 lobster roll, which is a ¼ pound of fresh Maine meat – and it can be difficult to make sure guests understand the value proposition.
“There are more cost effective ways to run a restaurant group than owning the entire supply chain,” Luke explains. “We are working with wild caught species that are susceptible to all sorts of environmental conditions. There are seasonal challenges that go into dictating prices. We could do a better job transcribing the effort that goes out on the waterfront every day to our guests.”
Putting more effort into marketing the true process that goes into harvesting a wild caught species and delivering that to a guest’s plate as quickly as possible, with as much care as possible, is a way Luke thinks they could overcome an area where they get push back from guests.
A Focus on Core Brand Values
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In order to compete with other restaurant groups, Luke’s Lobster has found a niche that sets themselves apart.
“Our core brand values are sustainability, traceability, community and quality. We do the best we can to achieve greatness in all four of those areas,” Luke says.
Luke’s Lobster manages its business by making sure they are sourcing seafood from sustainable resources and using as many sustainable practices when sourcing the business as possible. They promote traceability by showing exactly where their seafood is coming from at each and every shack. Luke focuses on affecting positive change in every community they work with, from the community of fisherman that harvest the seafood, to the group of over 100 employees at Cape Seafood that are cooking and packaging the seafood for each restaurant and finding local charities to give back to in the communities where every shack is located.
“Sometimes there are easy shortcuts you can take to increase profits but we don’t chase that type of stuff,” says Luke. “We never make decisions that sacrifice quality.”
Luke uses social platforms, like Instagram, Twitter, Facebook and Yelp to get their brand messaging out to guests and learn what guests are thinking. Social media is also a great way to build up a community of loyal guests and stay top of mind outside of the four walls of your restaurant.
“We use these platforms to make sure that guests understand that we’re listening,” explains Luke. “In the event that there’s negative feedback, we’re reacting to it and making sure they’re heard and in the event that there’s positive feedback, we’re saying thank you.”
This type of care and attention to their guests has helped build an organic community on social media.
"There's been no one event that's gotten us from 100 followers to 1,000. It's two or three more every day for the last five and a half years," says Luke.
How to Build a Team to Scale Your Business
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When Luke decided open the first Luke’s Lobster outside of New York, they chose to expand to Washington DC first. Luke went to school in DC, and his brother was living there at the time, which helped Luke get comfortable with that market. In fact, his brother decided to stop his consulting career and join the Luke’s Lobster team full time.
“We saw site selection and construction, and then hiring and stabilization. From day one we had a lot of great praise and feedback from our guests. There’s a lot of great excitement for a Maine lobster roll down in DC – there wasn’t anything like it,” Luke shares.
As Luke shares, one of the most meaningful things you can do when running a business is have good people to help you run it. You’re only as strong as the team that is growing your product, so finding a team that shares your vision and is motivated to achieve it is one of the most important tools you can have.
“The old adage is slow to hire, quick to fire. I believe the slow to hire recommendation, but being impulsive on the firing side is not good advice at all,” says Luke.
Luke recommends spending more time on the front end making sure the person you are hiring is who you think they are and that the capabilities represented on their resume are accurate. It really is a close relationship, especially when you’re hiring employees at an early stage in your company, so it’s important that everyone knows what they’re getting into. Understanding how you define success and what measurables employees will be focused on as part of their job function will help the entire team be more successful in the long run.
“A great manager is a multiplier,” says Luke. “Someone who can understand how to enable and empower those around them to do more, to make 2×2 actually equal 5. We’ve been blessed to have some really good people and treated them right and they’ve in turn been great multipliers.
Hiring a great team has been key in building additional Luke’s Lobster shacks in New York as well as expanding the business to New Jersey, Philadelphia, DC, Maryland, Chicago and Boston and continuing to share the high quality, authentic food and experience with more people around the country.
"There's all sorts of scary things that happen being an entrepreneur and all sorts of highlights," Luke concludes. "It's really good to have a group of people around you that you can share in the down times and celebrate the high times."
This article originally appeared on The Vault on Bolstr.com.
