Luke Holden, CEO of Luke’s Lobsters and a native of Cape Elizabeth, spoke at the Fosters Center for Student Innovation on Wednesday, April 12 about his restaurant chain’s success in bringing authentic Maine lobster rolls to eight other states.
Holden sits on the Lobster Institute Board, which was celebrating its 30-year anniversary at the lecture. The Lobster Institute was founded in 1987 as a co-op between the University of Maine and Fishermen with a Mission to Sustain Lobster Stock.
Holden began his professional career working for a mergers and acquisitions firm on Wall Street, but eventually realized he lacked the passion that he had working in Maine. That’s when he began his unsuccessful search for an authentic lobster roll in New York.
At the time of the restaurant’s conception, most Maine lobster sold outside the state had passed through dealers, processors, distributors and wholesale companies before it reached the retail market. The extra steps between the fishermen and the restaurant result in more expensive and less-fresh lobster.
Luke’s Lobsters, which Holden said employs roughly 500 people and makes about $50 million of profits worldwide, was founded in 2009 with about $30,000. The restaurant has grown to 22 locations in the U.S. and five in Japan. The chain is now ranked in the top 50 rapidly growing restaurants by restaurantbusinessonline.com.
The chain’s success came in several steps. One of the most important ones was establishing vertical integration between the restaurant and the fishermen. Through a partnership with his father, who Luke said held Maine’s first lobster processing license, he was able to reach Maine’s fishing community, allowing him to deal directly with them.
In 2012, Luke’s Lobsters purchased a processing plant in Saco, Maine allowing them to cut out another middleman. Holden mentioned that the expense of the plant meant it was not an immediately profitable investment, but allowed them to control profit margins over time.
In 2016, the Company purchased a wharf that was struggling to operate with profits from the 200,000 to 300,000 pounds of lobster they were buying from fishermen annually.
Holden said the company wanted them to buy the wharf because they were from Maine and otherwise would have had to sell it to a Canadian company, but the business model had to be changed. The solution was the Tenants Harbor Fisherman’s co-op. It created competition that gave the fishermen and opportunity to increase their profit margin, allowing Luke’s Lobsters to cut another link out of the horizontally integrated company and increase the fisherman’s wages and catch.
The company’s influence in the market came at a crucial time for many fishermen: The price of lobster dropped $2 from Aug. 2005 to Aug. 2009.
Holden described the company’s drive for increasing sustainability and how cutting out the middleman may help that. He said the customer is getting smarter and demanding more transparency in food production. The attention to detail leads Luke’s Lobsters to focus on the traceability of their food, which has been made feasible through the products vertical integration.
The sustainability attempts go beyond just the food extending the restaurant’s source of electricity, lighting and building supplies some of which are recycled from old barns in Maine. Holden also highlighted restaurants he thinks are working towards sustainability such as “&pizza” and “Bareburger.”
Holden believes that customers’ emerging desire for transparency is making our food system better. He said “great people and great service” are what drive’s Luke’s Lobsters forward.