It's hard to believe you can do seafood wrong, but if the decline of Red Lobster showed us anything, it's that even the simplest of dishes -- and concepts -- can go awry if not marketed correctly.
The former Darden Restaurants (NYSE:DRI) chain that was just sold to a private equity firm for the discounted price of $2 billion (though activist investors thought the property alone was worth $4 billion) too often relied upon discounting to drum up customer traffic following the economic downturn, only serving to reinforce its image as a low-quality seafood shack.
For all its apparent shortcomings, Red Lobster's hardships weren't completely of its own making. According to the National Fisheries Institute, seafood consumption has been on an extended decline; last year, National Oceanic and Atmospheric Administration data showed Americans ate 14% less seafood on average in 2012 than they did in 2006, with consumption falling from 16.5 pounds to 14.6 pounds.
The collapse of the financial and housing markets fed the decline, as consumption had previously been fairly stable, but factors including cost and consumers' changing tastes also played a role.
For example, Nation's Restaurant News reported that Datassential MenuTrends found that although fried remains the most popular way to prepare seafood, appearing on 43% of center-of-the-plate menu dishes, that's actually down 14% from 2010, no doubt reflecting a growing concern about health. The rise of fast-casual dining chains such as Chipotle Mexican Grill and Panera Bread, with their use of fresh, natural ingredients, mirrors that trend.
Meanwhile pan-seared and roasted seafood now appears on 19% of restaurant menus, up 14% in the past four years, while other popular -- and presumably healthful -- preparations such as seared make an appearance on 17% of menus, a 13% increase.
The fish fry is fried
The types of seafood we're eating is also changing, reflecting rising costs. Although shrimp, canned tuna, and salmon have consistently remained the top three choices for consumers, they've fall sharply in the past 10 years, while cheaper fish such as tilapia and pangasius -- which you've probably seen in the supermarkets as swai -- are rising sharply. In fact, swai has replaced flatfish like flounder in the top 10 seafoods consumed.
That's likely because they're more easily farm-raised and represent a better value per pound than other fish and seafood.
Like shooting fish in a barrel
The folks at Market Force Information surveyed 6,100 consumers in the U.S. and Canada regarding their favorite seafood restaurant chains. They wanted to filet the best ones and toss back the rest, weighting them on seven criteria: food quality, atmosphere, fast service, friendly service, cleanliness, value, and kid-friendliness.
So which seafood restaurants did consumers reel in?
Naturally, the top-rated chains won top honors for food quality and also ranked highly on atmosphere; but perhaps surprisingly, service, cleanliness, value, and catering to kids went to other restaurants. Apparently so long as you're getting the food right, customers are more than willing to forgive missteps or other shortfalls.
Hook, line, and sinker
Knowing those were the determining factors for which restaurants made the cut, what's your best guess for the top full-service seafood restaurant?
I doubt few picked Red Lobster. Although it might fill in serviceably in a pinch, it's seemingly been a long time since the chain was synonymous with quality, and slathering butter on all of its dishes likely turns off the more health-conscious consumer these days.
That could be why it came in dead last in the survey of the top five chains, though I bet more than a few people still appreciate its Cheddar Bay Biscuits, which it has taken to boxing up and selling in supermarkets. However, the biggest seafood chain, with almost 700 stores, did come in at No. 2 in the value category.
The fourth-ranked chain was Ignite Restaurant Group's (NASDAQ:IRG) Joe's Crab Shack, which beat out all comers in three categories: service, accommodating kids, and making dining more of an experience. But that wasn't enough to overcome the apparent deficiencies in food quality, which remains a diner's most important consideration.
That was also the case with Darden's other seafood chain, which it considers one of its future growth concepts, Bahama Breeze. It delivered an even performance across the board to come in at No. 3, and even took top ranking when it came to value, but otherwise didn't stand out from the crowd.
It was up to the survey's top two chains to battle it out. Both ranked within the top three for atmosphere, and they were tied for best food quality, but coming up just shy of the winning score was Bonefish Grill, the 200-restaurant chain operated by Bloomin' Brands (NASDAQ:BLMN).
A whale of a tale
So did you guess Pappadeaux Seafood Kitchen as the best full-service seafood restaurant?
This is a small chain of 35 family owned seafood restaurants, centered in and around Texas, that is actually one of the largest family owned and operated restaurant companies in the U.S. The Pappas family actually operates more than 80 restaurants in seven states, featuring a range of cuisines including Mexican, Greek, burgers, and steak. Their seafood shacks appear to do seafood right and schooled the other restaurants, ranking far ahead in the survey's composite customer loyalty score.
Obviously, a few seafood chains have been left off the list. Legal Sea Foods, for example, is a chain similar in size to Pappadeaux; Landry's has a portfolio of seafood restaurants including McCormick & Schmick's, Bubba Gump Shrimp Co., and Chart House; and don't forget fast-food seafood places like Long John Silver's and Arthur Treacher's. Are any of these on your top seafood haunts?
The one that got away
The restaurant industry as a whole is facing a tough economic environment, and seafood chains are certainly feeling the pinch. Although consumers have cut back on the amount of seafood they eat, chains such as Bahama Breeze and Bonefish Grill continue to expand and could be restaurants that investors want to reel in.
Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends Chipotle Mexican Grill and Panera Bread. The Motley Fool owns shares of Chipotle Mexican Grill and Panera Bread. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.