Let Them Eat Lobster!

How can Luke’s Lobster react to a boiling ocean, which cooks lobster before they’re ready?

Today’s Lobster Market

“Up in Maine, lobsters are thriving…. Down the coast, however, the story is different. In southern New England, lobster stocks have plummeted to the lowest levels ever recorded, putting many lobstermen out of business” – The New York Times8

The trend towards declining lobsters in southern waters is ominous. And climate change, is likely to blame.

 

Climate Change Threatens the Future of the Lobster Market

Climate change has a significant effect on oceans: over the last 100 years, ocean temperatures have risen by about 1.3°F. For many species sensitive to rising ocean temperatures, this trend may ultimately prove deadly.7

And, lobsters happen to be one of those species.

Climate change is closely “associated with the success of lobster recruitment in the Gulf of Maine.” 2 Data suggests that there exists “an optimal thermal condition… for some limiting stage in the life cycle of the lobster and [that] enhanced recruitment follows this optimum up and down the coast with each climatic oscillation.” 2 And, there seems to be a temperature threshold above which “natality or survival during early life history stages” is acutely threatened.1

High temperatures that remain below the threshold “may be speeding up their metabolism, leading to the population boom.” But, once the threshold is crossed, the lobsters are unable to survive.8

In water 5°F warmer than current conditions, lobster larva “struggle to survive.” And, the United Nations’ Intergovernmental Panel on Climate Change expects the Gulf of Maine’s temperature to increase by 5°F in 2100.9

Therefore, climate change poses a significant threat to Luke’s Lobster and other Maine-style lobster restaurants.

 

Luke’s Lobster Overview

Founded in 2008

Mission: Serve traceable sustainable Maine-style seafood to guests around the country

Early Success: $20.9 million sales in 2015, projected to reach $42 million in 2018. 19 Luke’s Lobster restaurants, with plans to expand to nearly 60 restaurants by 2020.3

Concept: Keep stores minimal, take orders at the counter to reduce overhead, serve high volume seafood to enable low margins, and “offer a product that is so fresh it doesn’t seem like fast food.”4

Strategy: Complete vertical integration, providing complete “ocean to table” service.3

 sustainable

 

Control Through Vertical Integration

Vertical integration enables Luke’s Lobster to better control the following:

  • Origin: Luke’s Lobster can track where and how lobsters are caught
  • Quality: Luke’s Lobster can ensure lobster freshness
  • Cost: Luke’s Lobster can be independent of suppliers who can charge a fluctuating price for lobster
  • Sustainability: Luke’s Lobster can monitor and manage sustainability practices intended to improve overall lobster yield

taste

 

Sustainability in Action

Luke’s Lobster is dedicated to sustainability; it is central to their mission.

“Preserving our fisheries will forever remain at the core of our business…. We all must play an active role in ensuring our oceans continue to exist as a key source of food and livelihood for people all over the world.” – Luke’s Lobster5

Sustainability is enabled through vertical integration.

Luke’s Lobster has ownership stake in a co-op of trusted Maine fishermen and ownership of the lobster processing plant that readies lobsters for sale at restaurants – “there’s no middleman in [the] whole chain.”3

Having ownership of known and trusted fishermen allows Luke’s Lobster to support and control sustainability practices. Without having strengthened control over the entire supply chain through vertical integration, initiatives taken to address the sustainability issues plaguing the lobster industry would likely be less successful.

 

Additional Steps Luke’s Lobster Should Consider Implementing

  • Communicate sustainability “best practices” and spread the effort across the community
    • Collaborate with other lobstering companies
    • Potentially partner with local government and activist organizations
  • Devise other ways to improve the survival of baby lobsters once they hatch. One way might be to raise baby lobsters in a controlled environment and release them into the ocean after they have had time to appropriately develop

 

Unfortunately, if the trend of rising ocean temperature continues as predicted, Luke’s Lobster will need to brace for impact. If Luke’s Lobster cannot find a way to improve the survival of baby lobsters, lobsters will become increasingly scarce, and Luke’s Lobster’s model of supplying (fresh) fast food to the masses will no longer make sense.

(701 words)

 

 

1. Fogarty, M. (1988). Time Series Models of Main Lobster Fishery: The Effect of Temperature. Retrieved from: http://www.nrcresearchpress.com.ezp-prod1.hul.harvard.edu/doi/pdf/10.1139/f88-137

  1. Haring, G, Drinkwater, K. & Vaas, W. (April 2011). Factors Influencing the Size of American Lobster (Homarus americanus) Stocks Along the Atlantic Coast of Nova Scocia, Gulf of St. Lawrence, and Gulf of Maine: A New Synthesis. Retrieved from: http://www.nrcresearchpress.com.ezp-prod1.hul.harvard.edu/doi/abs/10.1139/f83-027#.WBwKhvkrLZt
  2. Morrissey, J. (Aug. 2016). A Restaurant’s Sales Pitch: Know Your Lobster. Retrieved from: http://www.nytimes.com/2016/08/25/business/smallbusiness/lukes-lobster-restaurants-coops-seafood.html
  3. Quittner, J. (2013). The Little Lobster Sandwich That Could. Retrieved from: http://www.inc.com/30under30/jeremy-quittner/lukes-lobster-luke-holden-ben-conniff-2013.html
  4. Company Website. Retrieved from: http://www.lukeslobster.com/
  5. HBS Business and Environment Initiative, “Climate Change 101”
  6. Henderson, R., Reinert, S., Dekhtyar, P., & Migdal, A (Oct. 2016). Climate Change in 2016: Implications for Business (317032)
  7. Zimmer, C. (Sept. 2015). Retrieved from: http://www.nytimes.com/2015/09/08/science/warming-oceans-putting-marine-life-in-a-blender.html
  8. Associated Press (Sept. 2016). Retrieved from: https://www.theguardian.com/environment/2016/sep/24/lobsters-climate-change-oceans-marine-life-seafood-research

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12 thoughts on “Let Them Eat Lobster!

  1. Very interesting, as the percent of blue lobsters relative to red seems to be increasing, demand for lobsters will likely decrease as consumers rarely show preference for blue colored foods (besides blueberries).[1]

    [1] http://www.bbc.com/news/magazine-36369687

  2. As Luke’s Lobster expands from 19 to 60 stores, its geographic diversity will increase as well. According to its website (http://www.lukeslobster.com/), a location in Miami will be opening this fall. Luke’s Lobster will either need to bear the increased costs and emissions from shipping its lobsters from its trusted Maine suppliers or partner with new suppliers closer to these locations. I think it will be very difficult to try to grow local supply chains quickly (and in some locations in the future there is obviously no opportunity for local lobster fishing), so they will be forced to ship lobsters from Maine to Florida. This would be an energy intensive endeavor that would contribute emissions to climate change. Luke’s Lobster’s growth plan seems to be at odds with causing minimal environmental impact.

  3. While Luke’s Lobster’s current sustainability initiatives are noble, they do not do anything to combat the main issue raised in the post – rising ocean temperatures. Understanding Luke’s is a small player and that this is a much larger solution, it is surprising to see that they have done little to raise awareness of an issue that threatens to literally kill its business. It seems like Luke’s should try to start educational and PR campaigns around rising ocean temperatures, helping to bring it more top of mind to its consumer base.

  4. Raising awareness is noble, but at this late stage, Luke Lobster’s actions are not enough to prevent the issue of rising sea temperatures from affecting their lobster supply in New England. That being said, in the future, could Luke’s Lobster simply look farther north for it’s lobster supply? In the future, the “Canadian Lobster” could be as famous as today’s “New England Lobster”.

  5. I agree with SLA. We see other companies make an effort to speak out on behalf of the environment to try and persuade other members of their particular industry to change practices. Luke’s Lobster seems to only care about promoting their own small role. It feels like a gimmick. Additionally, is Luke’s Lobster controlling their supply chain for sustainability reasons, or as a means to capture more profit.

  6. Very interesting and unfortunate description of events. I agree with the idea that you mentioned towards the end of your post with regards to devising a method of raising young lobsters and then releasing them into the wild once they are better able to deal with adverse conditions. This wouldn’t work in practice however because there would be no way for fisherman to keep track of their “lobster herd” and other fisherman would be incentivized to steal rather than spend money for their own lobsters. Due to this and the apparent substantial environmental damage to existing lobster populations, it seems that the only long term option would be to begin investing in high quality lobster farming where lobsters can be raised under ideal conditions. There is another company called Marine Harvest ASA which is doing this but with Salmon. Someone wrote about it for this assignment – it’s really quite a piece.

  7. This was an eye-opening post as I didn’t realize how the climate change directly affected my intake of seafood.

    You suggest that lobster companies should collaborate and communicate sustainability best practices? However, who will take the lead in terms of doing the necessary R&D? I also wonder if companies will share best practices with each other if their success depends on their being more successful than their competitors? Are there currently any government regulations or incentives that promote collaboration?

  8. A great example of embracing climate change and going with the flow, rather than fighting against it.

  9. While sustainable “best practices” might help, given the situation you just laid out, I think developing the controlled environment for baby lobsters will have more chance of success. “Best practices” can only help improve or maintain existing population of lobsters, but if temperature continues to rise, I doubt that current best practices can stop the lobster population from declining.

    It seems like some companies such as Red Lobster and Roy’s Farm are moving in the direction that you described. They’re growing lobsters in ponds or cultivating slightly different lobster species that can survive in new environment.

  10. This post was super interesting, not just because I love Luke’s Lobster’s food. I’d imagine in the short to medium term, if lobsters are flourishing in Maine and the company wants to remain vertically integrated, Luke’s would have to decide if they want to expand their operations northward to source more fresh lobster. Another step beyond perhaps protecting the eggs until when they hatch is protecting the ecosystem that baby lobsters grow up in too. Coastal rockweeds are a lobster’s main source of food, so linking up with the community to ensure its survival is equally critical!

  11. Anonymous,
    I appreciate this article since I really enjoy lobster. I don’t expect to live to 2100, but I am a concerned consumer. I agree with others that I think Luke’s is conflating its responsible sourcing with sustainable sourcing. This is a huge misrepresentation to its customers. If Luke’s really wants to take more sustainable action, it should actually move towards aquaculture farming and sustainably growing its own lobsters. The advantage of this is two-fold: 1) Luke’s would actually be doing what it says it is doing by sustainably growing its own lobsters, and 2) Luke’s can actually almost completely ensure the quality and safety of its lobsters for its patrons if it farms its own lobsters in a closed aquaculture ecosystom – there won’t been any pollution or unknowns in the lobsters’ feed or environment. In general, consumers tend to think that wild fish and seafood is fresh and safe, when in fact you have no idea what environment that seafood has been living in or what pollution it may have consumed or been exposed to.

    If you want to pass this along to Luke’s, I was able to quickly google a 5 step set of instructions for how they can make their own aquaculture farm. http://www.wikihow.com/Create-Lobster-Farms

  12. Thanks for raising an interesting case! Lobsters are certainly not top of mind when it comes to things we may lose due to climate change – kudos.

    At the time frame and pace you cited, I suspect Luke’s Lobster is not as economically motivated to invest in sustainability as they are attempting to be socially conscious and (more cynically) marketing to our climate fever generation. That being said, I respect their initiatives to own their supply chain and adhere to CSR principles though they are not a public company. My sense is their next steps from a business perspective should be to set up a defensive sourcing strategy, working with partners north of Maine early on to establish relationships that will become handy as Maine stocks dwindle. I also would raise that Luke’s Lobster and other restaurants highly reliant on one or a few ingredients should seek to diversify and reduce over-fishing of a select population within a biome as an additional sustainability measure.

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