Luke’s Lobster On Startup Management

Luke was drenched in sweat. Tomorrow would mark another milestone for him with the 10th Luke’s Lobster shack opening, and yet, the seafood was short in supplies. As if life ain’t challenging enough, the carpenters had yet to complete their renovation work. Let me remind you, I am not going to talk about how good Luke’s Lobster Roll is in this blog post. It’s all about startup management and not advertising. Right?!

Just 9 years ago, Luke had a fight with his parents. His folks wanted him to continue with an undergraduate degree education when all he had ever loved was to help out in the family’s restaurant. The family was in the seafood business for two decades but the business wasn’t doing that well.

startup funding rounds

His parents gave him an ultimatum. The young chap could either choose to continue with his studies or his folks would not pay for college. Truth be told, his parents did not think that he should take over the family business. The prospect did not seem bright. As a good son, Luke relented and pursue his college education in Finance. After all, his startup can wait after he fulfills his duty as a son.

After graduating with a CPA four years later, Luke joined banking. His dad has instilled in him some great values notably his prudent characteristic. After a year working with the bank, the good son invited his father to invest in the former’s master mind, the first Luke’s Lobster. And this is all where everything begins. Like I said, this blog post is meant for our lesson. Therefore, let’s visit some principles adopted for effective startup management!

PASSION ALWAYS MOVES FIRST

Just like a passionate entrepreneur, Luke loves everything that comes naturally from the sea. If everything goes, I would say, passion is Luke’s first principle in startup management. Period!

Luke's Lobster Rolls

The sight of fishes swimming in his restaurant’s restaurant never fails to mesmerize Luke, even as a young boy. For all he knows, he should have pursued a college degree in oceanology. But again, Luke is always realistic about the materialistic world. He loves business…the seafood business.

Ask Luke whether he will ever succeed if he has started a coffee shop instead, he would give an instant “NO” for an answer. As a layman in the food business, it would always be easier to start a coffee shop vs a seafood shack. For one, the process in the kitchen is so much easier.

The new restauranteur enjoys working on the lobsters as much as collaborating with his chefs. He is always leading the way to inspire new cooking methods for his crustaceans. His training as an accountant adds a needed perspective on product costing. As a result, the lobster shack’s innovations are always within customers affordability, without compromising on their taste bud.

INNOVATES, INNOVATES AND INNOVATES

Only passion will drive innovation. If you are in business purely for the money, you won’t innovate. Most will just become copycats. In other words, continuous innovations are a sign of passion.

It was so easy for Luke to stay with the status quo of a seafood restaurant. The sight of a typical live seafood restaurant is so ingrained in his brain that it should be near impossible to get the image out. By the way, being a copy cat should be the main prerequisite of bad startup management if I ever come out with a post for that!

Startup Management

Did I mention that the innovator knew what his customers wanted? People love lobsters, but they are too expensive. As a result, Luke strives on cost-effectiveness by coming out with creative ideas on serving you that juicy crustacean. How about lobster burgers and crab meat rolls?

Visit any Luke’s Lobster and you will witness a true genius at work in startup management. One will see the efficiencies of a fast food joint minus the cheap products that stemmed from the system. Luke and team make sure that every part of a lobster is put into good use without sacrificing on quality.

FOCUS ON THE BRAND

An entrepreneur might be a genius but if he doesn’t care about building his company’s brand value, it’s still rubbish talk. If anything, Luke is a maestro in brand building even when he first started the first shack.

Startup Management In Luke's Lobster

Walk into Luke’s Lobster, and you will identify immediately with their unique presentation as opposed to other seafood eateries. How many times did you need to wonder the bomb it would cost you for a seafood dinner near the seaside? In Luke, you don’t have this problem. The friendly ambiance seems to welcome you with an open arm. Just like KFC, with a classic twist!

Always keep your brand in mind when it comes to startup management. On a different note, you might argue that you don’t own the product because your company is into the commodity business. But, you can still build your brand value into the service for your customers. Let your customers think about you when they want to order a few bags of potatoes. Make your company different by making a difference. That’s branding.

DITCH RAPID SCALING

A private equity firm is funding Luke’s Lobster. Contrary to naysayers, the VC never pressured the team to scale excessively.

Luke does not believe in expanding his business in a rapid manner. When he opens a new branch, he always makes sure to develop a strong team to handle the daily operation before he even thinks of the next location. His management team takes their time to nurture each of their shack to be able to carry their own forte. Al in terms of quality and operational excellence.

Brand Building In Startup Management

This is in contrast with Mark Zuckerberg’s now infamous motto of “move fast and break things”. In their haste to exert total dominance in the social media domain, Facebook has scaled at an exhilarating pace. By taking over notable companies like Instagram and Whatsapp, the social platform has controlled a sizeable share across the whole demography spectrum from teenagers to mature audience. And yet the recent Cambridge Analytica data scandal is indeed threatening to break Facebook up into pieces. Read more about the American’s perception of the use of social media here.

Luke’s company applies to vertical-integration that oversees the whole lobster supply chain. The model includes the whole process of fishing, storage, delivery, handling, and sales in the restaurant. In a nutshell, nothing is delegated to the third party agents.

Therefore, the company’s priority is getting everything right before thinking about business expansion. Due to this, most new locations are set up within an adjacent region for supply chain efficiencies. You can take a look at the location of Luke’s Lobster here for verification.

THE WISDOM IN FRUGALITY

Luke took his time when he started the first lobster shack. He remained in employment with the bank while he engaged a partner to run the first outlet.

Such a gesture is rare in silicon valley. During the dot com eras, young internet businesses were flushed with millions in fundings before the need to earn a single dime. Instead of using the capital for sales related effort, owners used the fund on themselves first. They paid themselves exorbitant salaries.

Luke's Lobster Variety Of Food

Lobster shack focused on sales and operational excellence early. Luke did not draw any salary for years because he had a job to fall back upon. The partners would inject every dime earned back into the business. His new partner whom he found on Craiglist did receive a salary though.

According to CBN Insights, running out of cash is the second top reason that causes startup failures. The cause hems in a whopping 29 % of the total failures.

An heiress of a medium-sized business empire had just graduated from Australia. Let’s call the lady, June. Based on a discussion with a few friends who told her that there was a market for French bread in Malaysia, June convinced her father to build a factory from the ground up. Purely from a factless discussion, the group built a state of the art bakery that produces French baguette with a capital of $5 Million, 8 years ago. To date, the bakery is still running at a loss.

FIND PARTNERS WITH DIFFERENT SKILLS

Luke found a partner who is a Food Science graduate from Craiglist. While he continued his job in the bank, his partner worked in the lobster shack.

His family members may know the best way to grill a panful of crayfish. However, there are more than meets the eye when it comes to food preparation for the mass in different locations.

scaling a business

Scaling a company that size requires a vast myriad of skills to pull the feat off. Luke’s experience in finance and seafood might be adequate in running two to three restaurants. But to scale the business exceeding these range is complicated, to say the least.

The team must set up a whole new delivery network for the live seafood that not only ensures delivery deadline but must preserve the well being of the crustaceans. The business model strives to serve affordable fresh lobster to customers. Therefore, every seafood that remains alive before they are cooked, is critical for the bottom line.

OWN THE WHOLE BUSINESS, INCLUDING THE STRESS

When you engaged in the day to day operation of a sprawling restaurant business, your passion could only bring you so far.

Back to June the heiress. She was lucky. As the founder’s daughter, June need not worry about being fired in spite of the failures she made. When the going got tough, the board had even hired another COO to run the show, while reporting to her at the same time. Her dad wants to protect her daughter by delegating the problems to other people.

A true blue entrepreneur will never delegate his accountability. Luke started the business and as a result, he owns the business in totality. He alone is accountable for the sales, customers, lobsters’ quality, problems, complaints, low seasons, the loss-making shack and others. The directors can only delegate their tasks.

The experience of Luke in Luke’s Lobster applies to many startups. I may love life as a solopreneur, but that doesn’t mean that finding private funding is a mistake. There are many ways to skin a chicken but adhering to a set of wisdom will keep you grounded on the right path.

Source: Harvard Business Review

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.