How I Built Resilience: Luke Holden and Ben Conniff of Luke's Lobster

COVID-19's impact on the seafood industry hit Luke Holden and Ben Conniff hard; in March they closed their restaurants and laid off 300 employees. Since then, Luke's Lobster has been able to stay afloat by upstarting an e-commerce website, but their focus remains on sustaining the local seafood economy of Maine. These conversations are excerpts from our How I Built Resilience series, where Guy talks online with founders and entrepreneurs about how they're navigating turbulent times. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

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• 5:06Guy Raz?

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• 5:50Guy Raz?

  and you can check it out if you're interested. Anyway, since then, Luke's Lobster has gone through the many stages of a restaurant during COVID, which meant furloughing and temporarily closing more than 30 restaurants in the US, Taiwan, and Japan. Luke and Ben not only oversee a restaurant chain, but they also work closely with their fishermen to buy, process, and ship lobster and other seafood around the US. I spoke with Luke and Ben from their office, which is right by the water in Portland, Maine. So you might hear some boat engines and glass clinking in the background, but it kind of feels like you're catching lobsters with them. So When it became clear that the pandemic was really going to create some severe economic disruptions,

• 6:35Guy Raz?

  you guys had to take some severe actions, right? I mean, you had to shut down your processing plant. You had to let go about 300 employees. Walk us through the process of what you did as you realized this was going to be really severe.

• 6:49Speaker 01

  It was absolutely horrible. It was really March 7th, that week that this kind of slammed home for us. I think we were good to act quickly, but this business, I mean, not just because my namesake is in it and my family is part of it. There is no difference or delineation between my personal and business life. So when you're faced with ultimately making that critical decisions to like save a business, it affects your family and friends in major ways. And that week was, there's nothing like that I've ever experienced. Calling up some of your friends and family members and furlough, terminating, reducing salary. We got super small that week.

• 7:32Speaker 01

  We got aligned around some strategic initiatives pretty quickly. Safety and people was always our number one priority. Like moving all hourlies to unemployment and doing it quickly was intentional. We knew that there was going to be backlogs in the unemployment offices. Something like that was intentional to act quickly there for their benefit. We also made sure that we had personal conversations with every single one of those teammates. There was no texts, there was no email, there was no like untethered connection. We made sure that they understood the why behind all of these decisions and the intention behind it. And that continued. We made sure that we kept tabs and opened dialogue with all of those teammates.

• 8:15Speaker 01

  So that we ended up shutting everything down besides one shack. And now we've got seafood company back up and going. We've got 12 shacks up and going. There's no way we would have been able to do that unless we had that mentality of people first and make sure that we had those open communications to bring people back when the time was right.

• 8:34Guy Raz?

  What did you say to an employee that you had to furlough? I mean, what was the conversation like? I mean, how did you explain that?

• 8:40Speaker 01

  It was tough. Transparency is one of our core brand values. We were not going to separate ourselves from any of our core brand values during this crisis. So we were honest with them. We were in a tough spot. We were a very seasonal business to begin with. We make most of our hay Memorial Day to Labor Day. And this couldn't have happened at a worse time for a business like us because we were kind of at the end of our rope to begin with. We're just at the end of our reserve and just about to start building, rebuilding reserves. So when this comes and sales go from 100 down to 20% or eventually nothing, there was nothing in the kitty to help get us on the other side of this. So we were honest about that. And we were able to have good, frank, honest conversations with our teammates because we

• 9:24Speaker 01

  made sure we over communicated in every kind of step of this. We made sure they understood what was in our heads and how we were making decisions. And I think as a result, we've always had very, very good relationships and trust with our teammates. So they understood that we really didn't have any other option.

• 9:40Speaker 02

  I'll also say like, the thing that everyone on this team understands is that we're here for a larger community than even just the Luke's Lobster team. You know, we're here for a seafood industry. We're here for fishermen and truckers and people in the production facility. Ultimately, if we're not there to buy the seafood as we've promised come May, June, July, then the entire machine fails. And you fail that many more people. So every teammate at Luke's understands that they're part of that broader family and that for them, you know, to go on unemployment to stay safe then actually was creating the

• 10:24Speaker 02

  opportunity come summer for us to continue buying and continue that ecosystem working.

• 10:31Guy Raz?

  Yeah, so how, tell me how it's working, man? Because I know back in May, you, you opened, you've got a processing, a lobster processing plant in Maine. That's where all of the lobster that's sold at your restaurants and that you sell to other restaurants that goes through there. It's not operating at full capacity. You've got, I think, about roughly 30 restaurants in the country and about 12 that are now open. So. I'm assuming that you're not able to buy the quantities of lobster that you had expected or hoped to buy, you know, starting in May. Is that right?

• 10:59Speaker 01

  It's right. So in the US, about 70% of the seafood is consumed within restaurants. And so when you completely take that out of the supply chain, you're left with a complete imbalance. And we knew that heading into this. So for us, we've had to pivot from selling to other restaurants and food service and casinos and cruise lines and build that grocery branded business that we had. We had to get from big unbranded commodity packs and start producing grocery branded freezer and refresh container type packages. So that was a huge pivot for us.

• 11:38Guy Raz?

  Because obviously you can't sell to cruise lines and casinos probably aren't buying a whole lot. And as you say, restaurants are not buying a whole lot. You kind of had to shift your focus to like, what, frozen lobster and lobster meat that you sell at grocery stores that's available for consumers to just purchase?

• 11:56Speaker 01

  In a nutshell, like fishermen go out and fish. We want these guys to be able to go out and compete and earn a living. So we've had to figure out how to produce a similar amount of production at our seafood company. And even though the restaurant sales are not taking nearly as much volume as they were pre-COVID or last year, we've had to take that production and reallocate it.

• 12:18Speaker 02

  Yeah. I mean, I think really the silver lining here was looking at how people started behaving in their kitchens once they were locked down. You know, they weren't just starting their own sourdough. They were also starting to cook seafood a lot more than they ever have before. You know, we noticed that there was just a new openness to trying new things in your home kitchen. So taking that conversation and starting it with our partners at Whole Foods, they were actually eager to help us move more seafood. And they came to us and asked how they could actually buy more lobster and how they could, you know, put inventory we would have sent to our restaurants into

• 13:03Speaker 02

  their seafood case or into an innovative product like a lobster cake. And so the first step was improving our grocery business and growing it.

• 13:12Guy Raz?

  Yeah. So mid-March, it was supposed to be a huge seafood expo. It was going to happen in Boston, the North American Seafood Expo. This is a huge opportunity for you. And then, I guess, at the beginning of March, a lot of the Chinese exhibitors just started pulling out. I mean, were you already starting to think about the possibility of what we're seeing today already that early? Or were you just kind of thinking, well, let's wait and see?

• 13:37Speaker 01

  We were fortunate and unfortunate to start to have rumblings of this and reality of this through our partners in Japan. It was pretty wild how those conversations tracked exactly how this played out in the US. We in the country really had that mentality that this wasn't going to happen to us.

• 13:59Guy Raz?

  Now, you've got locations in Japan and Taiwan. How are those locations doing? I mean, are they opened? Are they sort of operating normally in comparison to the ones in the US?

• 14:09Speaker 01

  They're open. So there's 10 shacks in Japan that are open. And they've made a lot of the similar decisions that we've seen restaurants in the US do. You know, they've got some of their best and brightest making the food and serving guests and changing their labor model and renegotiating rents with the landlords that want to be long-term partners. But the reality is that they are highly dependent on international tourism, and there's none of that. So they're working on a fraction of sales as well.

• 14:36Guy Raz?

  You know, it's really interesting to read about some kind of really creative things you did. Obviously, going directly to consumers by packaging lobster. You're also going direct to consumer through the website. And I think I read that some of your shacks started, you know, like when customers came to pick up meals, they were also selling things like flour and butter and like household pantry staples, which is super cool. I mean, really creative, right? What are some other things that you've been thinking about, even tactics that you're thinking about as you move forward to kind of, you know, try and diversify your revenue streams and keep everything, you know, moving forward?

• 15:14Speaker 01

  I think that, you know, what you said about the direct-to-consumer e-commerce is really, you know, one of the most exciting things that's been happening here and that has happened here. And that it really goes back to mid-March, when we first realized.

• 15:29Speaker 02

  We were going to have to start shutting down Shacks for a period of time that we didn't know how long it was going to be. All we knew is we need to find a way to keep buying seafood and getting seafood to people who want it. So it was actually an amazing experience. We had one of our teammates who was our culinary director named Lauren just suddenly have to start researching how to build an e-commerce business. And, you know, that had only really been a pie in the sky hope for us before then. So she started digging into the nuts and bolts. And then Meghan on our marketing team started figuring out how you market and advertise an e-commerce business. And it was almost like me and Luke in 2009 all over

• 16:13Speaker 02

  again, because they're in this kind of pressure cooker, don't have time, don't have experience, just need to figure it out situation. And in seven days, they had stood up this website. It was a pretty heroic experience to be a part of.

• 16:28Guy Raz?

  When we come back in just a moment, Luke and Ben talk about Maine's seafood supply chain and how it'll be affected in the coming months. Stay with us. I'm Guy Raz, and you're listening to How I Built This, Resilience Edition from NPR.

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• 18:17Guy Raz?

  Hey, welcome back to How I Built This: Resilience Edition. Luke Holden and Ben Conniff are not only the co-founders of Luke's Lobster, they're also the owners of a seafood processing facility that works closely with fishermen in Maine. We have had other restaurateurs and food companies on the show throughout the COVID period. We talked to Danny Meyer, famously the founder of Shake Shack and Union Square Cafe, and a lot of chefs and restaurateurs look to him. And there's no question that this has been the biggest challenge for the food and restaurant industry easily in half a century. Are you seeing or looking out across your industry and seeing how some are dealing with this creatively?

• 19:02Guy Raz?

  Are there ideas out there that you have seen that seem to be working that may work for you?

• 19:09Speaker 01

  Given that we're a vertically integrated seafood company, we have to look at all of our stakeholders and we've got to solve problems in our own supply chain. Again, our fishermen, they're going to go out and fish, and they need to do that to keep their livelihoods going. And then our production facility, 150 teammates there, they need those jobs and they need them on a monthly basis. So leaning into that supply chain and saying, okay, where are customers buying? And then how do we build robust businesses around that? We, our grocery branded business, in 2009, we probably did around 200,000 units between two different SKUs. We'll be over a million units this year. And then that other side of the business, the e-commerce.

• 19:53Speaker 01

  Business like bluefin tuna. We've got boats tied up around here because there's no market for an incredible product like bluefin tuna. So we started to sell that on our e-commerce site and it's not enabled us to go say, guys, go fish, go make a paycheck. And like for us, there's so many crinkles in the seafood supply chain beyond our typical lobster, crab and shrimp species. We get an opportunity to go solve with this e-commerce, um, direct to consumer model.

• 20:20Speaker 02

  Yeah. And I guess to answer your question, it's not, it's not just looking to restaurant leaders. It's looking at leaders in, in direct to consumer, e-commerce, grocery. Um, so there's been so many, you know, so many resources that, that either we've spoken to or researched that we're, we're sort of trying to borrow from all over the spectrum of, of industries at this point.

• 20:42Guy Raz?

  So is there a glut of lobsters of seafood right now? Is there, is there's an oversupply?

• 20:48Speaker 01

  Lobsters in particular, we've avoided a bit of a mess and well, price is healthy. It's not what it was last year, but on the flip side, yes, there's a huge glut here in the state of Maine for things like oysters, which are typically consumed in, in restaurants and bluefin tuna, which is almost exclusively served in, in restaurants. So we feel like we've got a great opportunity to, to showcase and deliver on, on some of the value propositions for these other wonderful species.

• 21:18Guy Raz?

  Give us a sense of, Ben, I think you said something back in Matt, I think it was in the Wall Street Journal, you said, there's no profit, only survival at this point. You know, that there's a whole supply chain who count on, on your company to pull them through. Can you sort of explain why? I mean, is that because the cruise ships and the casinos and the big restaurants are not ordering seafood that all these fishermen are going to you guys and saying, hey, like, can you help us out? Is that basically what's happening?

• 21:43Speaker 02

  I mean, in, in some ways, like for the example of this spring, we started selling Debo scallops. We'd never sold them before, but the guys that catch our lobster at that time of year also go out and catch scallops and they didn't have a home for a lot of those scallops. So. So you know, I know you normally don't buy this because you don't sell scallops in your restaurant, but I need a buyer or I don't know what I'm going to do with them and I don't know how I'm going to make my living during this particular season. And that was what made us realize that because we were going into people's home kitchens rather than into our shacks, which aren't built to cook a variety of items.

• 22:27Speaker 02

  We could now have this seasonal rotation of what fishermen were catching at its absolute best and at a time that they really needed a home for it. And yeah, those conversations really sparked the ingenuity on our side to say we can, you know, now that we're not limited to the four walls of the Luke's Lobster Shack in Manhattan, we can actually do a whole variety of different things. And rather than being restricted to only reaching folks within a short radius of our shack, we can now get them to the entire country overnight. Um, that constant interaction with fishermen and understanding

• 23:10Speaker 02

  what their situation was, what they needed from us, was really what what sparked our idea to pivot away from only selling lobster to to selling this greater variety.

• 23:23Guy Raz?

  You know, I I know that your lobster is certified sustainable, but I guess the the Marine Stewardship Council is going to revoke mains, the fisheries in Maine. It's going to revoke their sustainable certification, I guess, because fishermen have to go out further to get to cooler oceans, cooler temperatures, cooler waters as the ocean temperature rises. How will that impact the sustainability of what you guys do?

• 23:47Speaker 02

  I'll sort of just sum it up to say the MSC, Marine Stewardship Council, part of their policy is that they kind of have to follow what, you know, federal laws and and courts are are wrapped up in. And so there's this awkward court decision that's it's really not relevant to Maine fishermen because all the data and evidence shows that any issues with right whales are not really not. Happening in Maine waters, uh, based on their migratory patterns and where their food is. But this certification kind of gets gets lost as collateral damage in an issue that's that's really federal as opposed to Maine related. So it just means that we have to work that much harder

• 24:32Speaker 02

  to communicate the actual situation with lobster sustainability in Maine specifically. Because, you know, a lot of these certification bodies, they just aren't specific enough in looking at what fishery you're talking about and what issues are or aren't posed by that fishery. So, you know, it's, it wasn't exactly the problem that we needed right now in the middle of COVID. But ultimately, we know that the sustainability of of the catch here isn't isn't actually a problem.

• 25:04Guy Raz?

  Here's a question from Patrice Esperant. How has COVID shifted your approach to expansion? Because you you had really ambitious plans to expand and to build more restaurants out. So is that kind of on hold for now?

• 25:16Speaker 01

  Yeah, as you can hear in the background, you got the bottles clanking around. We're collecting the five cent deposits. Um, I wouldn't say it's on hold. It's something that we're starting to get reorganized around though. The restaurant businesses, it was tough pre-COVID. You know, there was a lot of competition for real estate and this whole like Amazon effect of ultimately a lot of retail going out of business. It created more and more competition for restaurants and more restaurants were sort of filling these real estates. So the whole concept of like share of stomach was very, very competitive. So we had escalating rents and and a lot of competition and it's it's horrible for the industry,

• 25:57Speaker 01

  but there's going to be opportunity to grow on the backside of this because there just will be a lot more, a lot more opportunity.

• 26:03Guy Raz?

  Um, given all the challenges that you faced over the last, um, six, seven months and that you will probably face for the next several months. Um, what are some of the things you've learned about your own leadership that you want to take with you into the business in the future when this hopefully passes? What are some of the things you've learned about how you lead that you want to continue? And develop and maintain.

• 26:25Speaker 01

  Yeah, I think for me, we've always run like a very flat organization. There's no task that's ever been too small or too big for this team. But what's been nice about this crisis is that as the team has had to really kind of come together and problem solve on a daily, weekly basis and make decisions with eighty percent of the facts because that's all we're gonna have. I've always been extremely appreciative of the team and the people here that choose to be part of this, this family business. But like how we've gotten back to our roots around having big team meetings

• 27:10Speaker 01

  and making sure that any concept of like hierarchy is sort of dismantled in a way of like transparency has been something that I really hope that we maintain going forward.

• 27:23Speaker 02

  I guess I would, I would say that this has really reaffirmed the importance of the core values of the business and especially, you know, our transparency and purpose. Because the other one is taste and that has been, you know, maintained throughout the business and always will be. But, you know, transparency, that ability to speak so directly, clearly and honestly with every person who touches this business inside and out is, I think, the number one thing that's kept us going and that's allowed us to make the right decisions and the right pivots with the right amount of input from everyone involved.

• 28:06Speaker 02

  And I think really our investment in the purpose, the reason that we're here and the benefits that we're trying to create, that's really guided our decision making and it's guided how we communicate with our guest base, which, you know, which continues to grow online even as it shrinks in person. I just firmly believe that we're seeing a consumer that is going to make their decisions more and more on what your company is doing to better the world. And I think that we need to. Be louder and louder about what that is because we're not looking to go back to

• 28:48Speaker 02

  normal. We're looking to create a new normal that's better for everyone. And I think that this situation has really just hammered home the need for us to focus on that.

• 28:58Guy Raz?

  Luke Holden, Ben Coniff, co-founders of Luke's Lobster. Thanks, guys.

• 29:01Speaker 02

  Thank you so much.

• 29:02Speaker 01

  Thanks, Guy.

• 29:04Guy Raz?

  That's an excerpt from my conversation with Luke Holden and Ben Coniff, the co-founders of Luke's Lobster. To see our full interview, you can go to facebook.com/HowIBuiltThis. And if you want to see all of our past live interviews, you can find them there or at youtube.com/NPR. If you want to find out more about the How I Built This Resilience series or other virtual NPR events, you can go to nprpresents.org. And don't forget, the How I Built This book is now available for preorder. You can find all the details at guyraz.com or at howibuiltthis.com. This episode was produced by Candace Lim with help from Will Mitchell, Matt Adams, Gianna Capadona, John Isabella, Julia Carney, Neva

• 29:46Guy Raz?

  Grant, and Jeff Rogers. Thanks for listening. Stay safe, and I'll see you back here in a few days. I'm Guy Raz, and you've been listening to How I Built This.