The Lobster Shanty

Built upon the essence of lobster, The Lobster Shanty in Salem, MA is an exquisite and delightful restaurant that offers exceptional food including lobster rolls, lobster risotto and lobster Rangoon, within a very casual environment. There are several key business markers that the Lobster Shanty has that keep it running smoothly and operating as a quaint dive bar with class.

Leadership in business, particularly hospitality is a crucial component. The management at the Lobster Shanty is built upon ensuring customer satisfaction, as well as keeping the staff happy as much as possible also. "I want everyone to like me as a boss, however I know there are going to be bad decisions that have to be made that hurt people. My job is to keep the shanty running and I now realize I have to make these tough decisions that are in the best interest for the restaurant rather than some individuals," notes the manager at the Lobster Shanty (The Lobster Shanty Q&A, 2013). “We pay out waiters $5 an hour plus tips, which is more than minimum wage, our back staff between $10 and $15, because their work is hard, they have to set up tables outside, do prep, dishes and our chefs have to be on top of their game. We also pay our bartenders a base price of $50 plus tips, our bartenders are also key holding managers. They lock up at the end of the night” (The Lobster Shanty Q&A, 2013).

In operating the business, the Lobster Shanty has to make sure finances are together in order to stay ahead of their competitors and keep advertising costs down as well. "Our biggest competitors are Scratch Kitchen, Tavern in the Square and The Old Spot. Each of those restaurants specializes in one particular category, where as we try to excel in every food category," notes the manager. Catering to customers with a variety of food on the menu is important when customers are wanting to have a selection. This is one of the many reasons the Lobster Shanty is such a well-known establishment in Salem. "Most of our business is from the locals. Our customers are very loyal and eat here on a regular basis. We also attract a lot of families because the food style is suitable for all ages, while also keeping a relaxed and comforting environment."

The Lobster Shanty has capitalized on the local market of Salem, MA with customers by employing a market segment strategy. This strategy includes keeping menu prices low and keeping advertising costs almost non-existent. The Lobster Shanty is "fortunate enough to have very low rent that [they] use to keep prices low. Prices are low [also] because of the competition in the area. The restaurant does not compete well in the alcohol department so [they] try to make up for that with low food prices" (The Lobster Shanty Q&A, 2013). The manager at the Lobster Shanty states that they do not execute much advertising. Reasoning for this suggests that the exposure they receive is primarily from "word of mouth and loyal customers.” “We span a whole lot of demographics. People who like and post on our Facebook allows Facebook to give us a number of the demographics we reach. We mostly have fans ages 19 to 35," the manager adds.

Their market segmentation strategy and word of mouth approach has worked well as the Food Network's Guy Fieri visited them on the show, Diners, Dive-ins and Dives. "It's been amazing the change we have seen since. The exposure was great and business grew three times the amount it was at before. People country and international wide have seen us and made their way to us over the years. It still plays and at least 5 times a day, a customer says they saw us on TV so they had to check it out." It stands to reason if the Lobster Shanty has plans to expand or open more locations given the success they've had and the notoriety post-The Food Network exposure. "We've certainly considered but haven't yet. We just haven’t found the right deal on a place." Perhaps it was unintentional, but the home-style fare, localness and operational management of the Lobster Shanty is what caused Guy Fieri to take note of it in the first place thus proving the old adage that good things come to those who wait.

Reference

The Lobster Shanty Q&A. (2013). [Interview]. (Transcript of Questions and Answers). Salem, MA.