Can Joe's Crab Shack Sustain Customer Cravings?

When I think of Joe’s Crab Shack, it immediately reminds me of a scary ad from a couple of years ago in which a giant claw descends from on high like a demolition machine, knocking people over if they think about eating someplace “bland” for dinner.

But to loyal customers, Joe’s is about crave-worthy steam pots and drinks, and they’ve helped the 136-store chain sustain positive same-store sales for 21 of the last 22 quarters, parent company Ignite Restaurant Group reported last week. Same-store sales were up 1.9 percent during the fourth quarter of 2013 and up 1 percent for the year, according to preliminary figures. Joe’s revenue for 2013 rose 6.9 percent, to $447.8 million.

Chief Executive Officer Ray Blanchette, in an interview with Nation’s Restaurant News, attributed the chain’s growth to having narrowed its focus to crab, which now accounts for about 50 percent of sales, as well as improved service and better marketing.

Another supporting factor: Customers ranked Joe’s Crab Shack tops among full-service chains for “craveability” in a recently released survey by restaurant consultancy Technomic. “People love those steampots” at Joe’s, says Mary Chapman, director of product innovation at the firm. That’s helpful, as four out of five consumers say “cravings are the main reason they purchase food away from home at least once a month,” according to Technomic research.

Still, “craveability” is a fickle measure of success. Red Lobster ranked high for craveability in an older Technomic survey, but same-store sales have been falling and parent company Darden is now spinning off the chain.

Then there are Joe’s ads. Ignite spent $20.7 million on advertising in 2012, according to filings, or about 4.5 percent of group revenue. It’s not much compared to, say, Red Lobster, which Kantar Media estimates spent $150 million on advertising that year, but it seems to be doing the trick. “Joe’s scores really well in advertising effectiveness—they’re not the leading casual-dining chain, but they score well above average,” says Chapman. “They do a good job of always having new product news, meaning there’s always a seasonal menu or special being promoted, giving them something to talk about.”

Ignite said during a November earnings call that it expects modest same-store sales growth for Joe’s in 2014.

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE