Web Exclusive | August 2012 | By Christine Blank

Fast Casual: Savior of Seafood

Fast-casual seafood chains hope to bring the category back from the brink.

Fast casual Boneheads hopes to revive struggling seafood segment.
Fast casual Boneheads hopes to revive struggling seafood segment.
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The seafood quick-service category has performed poorly in recent years, but budding fast-casual chains hope to capitalize on customers’ desire for healthier options and premium experiences to bring the category back to prominence.

Ivar’s Seafood Bar in Seattle, California Fish Grill in Los Angeles, Fish Express in Dallas, and Wahoo’s Fish Taco in Santa Ana, California, are a few of the up-and-coming fast-casual companies offering an alternative to quick-service stalwarts like Captain D’s and Long John Silver’s.

And experts say the time is right to bring a healthier product like seafood back to market.

“Chicken and seafood are two of the healthiest proteins and, with the Affordable Care Act, they are going to be very well-positioned products down the road,” says Darren Tristano, executive vice president at foodservice consulting firm Technomic Inc.

The major quick-service seafood chains have been struggling to differentiate themselves after taking a hit during the recession. Long John Silver’s total U.S. sales dropped from $700 million in 2010 to $635 million in 2011, while the net unit count dropped by 32 stores. Captain D’s total U.S. sales decreased from $436.2 million in 2010 to $433.3 million in 2011, and the net unit count dropped by 12 stores.

“You have got a category with Captain D’s and Long John Silver’s that has been around for a while, [but] has mainly been fried food,” Tristano says.

One brand that hopes to be at the fore of the fast-casual seafood movement is Boneheads, a five-unit chain based in Atlanta that was formed in 2003. Once owned by Raving Brands, Boneheads was purchased by a franchisee two years ago. Raving Brands, which also previously owned Moe’s Southwest Grill, now operates Monkey Joe’s, The Flying Biscuit Café, and Doc Green’s Gourmet Salads.

“Seafood is definitely a market that is under-served.”

Boneheads’ management team is planning aggressive expansion of the grilled fish and piri piri chicken concept in the Southeast U.S. Executives plan to open around 30 new units by the end of 2013 and an additional 30 or more in 2014.

“When [Raving Brands] created this, I knew it was the best food we ever created. However, Moe’s was selling at the time, so it became this 400-pound gorilla,” says Kevin Brock, the president of Boneheads who was previously an executive at Raving Brands.

Brock assembled a management team to grow and franchise the fast-casual brand. The company is now setting up seven to 10 area territories across the U.S. to provide franchisees with local and corporate support.

Boneheads’ average check is around $10, and menu items include grilled seafood meals served with rice and a side for $9.99–$12.99 each; shrimp and fish tacos; and grilled fish sandwiches.

Tristano expects Boneheads’ healthier concept and flavors to be a hit with diners. “They have a very good piri piri chicken product with a tremendous amount of flavor,” he says. “There are a number of Americans who just don’t eat seafood; having the piri piri chicken broadens their opportunity to sell to the U.S. consumer base.”

There is also room for growth in the seafood sub-segment of the overall fast-casual category, Tristano says. “Fast casual has outpaced the entire industry, and we are seeing the growth with burgers, sandwiches, bakery/cafes, and others. Seafood is definitely a market that is under-served,” he says.

Executives at Captain D’s and Long John Silver’s have taken note of the fast-casual seafood growth and are changing their menus and business models as a result. For example, Nashville, Tennessee–based Captain D’s has added grilled seafood items to its menu and the chain is working on “new cooking platforms” to offer more grilled items to guests, says CEO Phil Greifeld.

“We already have grilled tilapia, grilled salmon, and other grilled items, and we just launched a stuffed flounder product,” Greifeld says.

Captain D’s has also been testing a new store design and is franchising new stores after stalling growth for about two years. The combined efforts have garnered the 527-unit chain first- and second-quarter same-store sales increases of 8.5 percent, and a 7.3 percent increase in sales at all franchised restaurants.

“Given that we are performing well on both the top and bottom line, we will be looking to relaunch our franchising … throughout the entire Midwest and Southeast and select international opportunities,” Greifeld says.