Ready seafood and catch a piece of maine

Ready Seafood Business Model Innovation and Venturing in a Mature Industry Marc H. Meyer, Matthew Allen, and Fredrick G. Crane Northeastern University Boston, MA Corresponding Author: mhm@neu.edu Introduction__________________________________ It’s a perfect September day in Portland, Maine. Crisp and clear. And the harbor side location of Ready Seafood is already busy. A lobster boat has pulled up alongside the wharf and is unloading its morning’s catch. The boat’s skipper, who has been on the water since before sunup, relaxes on the pier, regaining his land legs as a Ready employee examines and weighs the lobsters, then puts them into a holding tank with dozens of their crustacean kin. Within a few minutes the lobsterman has been issued a check and is casting off , heading seaward to check his other traps. A lobster boat at the Ready Seafood dock. Source: Catch a Piece of Maine, with permission. Copyright © 2010, Marc H. Meyer, Boston, MA. All rights reserved. Materials for educational purposes only. Signed permission for use of data and graphics provided by Ready Seafood, Inc. Signed permission for use of data and graphics provided by Ready Seafood, Inc. Forthcoming in The International Review of Entrepreneurship. 360 Venture cases Meanwhile, inside a 5,000 square feet leased building, several young men are busily pulling lobsters out of super-cooled holding tanks and packing them into specially designed cartons for a journey that will speed them by truck to Logan airport, then on by air express to distributors in Europe and Japan. Others lobsters will be taken to the loading dock for local and regional distribution. The holding tanks in the backrooms could contain 45,.000 pounds of lobster at any given time. The Ready operation just described is quality-oriented and highly efficient. With the exception of its overseas sales, however, its business model differs little from the model followed by other lobster and seafood distributors on the same wharf and up and down the Atlantic coast. That model is simple and straightforward: take in freshly caught product from boats on one side of the wharf and sell it at a modest markup out the other side to local restaurants, supermarket chains, and other buyers. If a distributor can manage its cost, he or she can earn a 3–5 percent operating margin. While Ready has the appearance of a standard seafood distributor, a small, cramped office with two employees on the building’s second floor is creating something new and different— and immensely more profitable: catchapieceofmaine.com. This small but growing operation has established a direct supply link between ruggedly independent Maine lobstermen and the far flung individuals who purchase and consume their harvest. That link is tight and personal: the customer owns an interest in a lobster trap, and knows the fisherman who regularly baits and checks it. And she’ll hear from him often. “Hello,” says a voice on the phone as a customer is preparing a special meal for her guests. “This is Captain John from the Port of Cape Elizabeth, Maine. I’m on the boat and just calling to see if your lobsters arrived today in good condition. I caught them yesterday.” John and Brendan Ready grew up in Cape Elizabeth, just south of Portland, Maine. Their uncle Ted, like many other local men, was a commercial lobsterman, and through him they learned the trade. The business is dangerous and physically demanding to the point of breaking strong men before their time. But the two young men couldn’t get their fill of being out on the water, baiting and hauling traps. Before either was ten they owned their own boat and gear and were earning modest incomes. “Lobstering was our passion,” says John Ready, “and the older lobstermen were our heroes.” Off the Water and Onto the Dock_________________ The brothers continued lobstering through elementary and high school. Then Brendan went off to Stonehill College, where he majored in marketing. John enrolled in Northeastern University’s “coop” business program, a five-year undergraduate curriculum characterized by alternating Ready Seafood periods of work internships and classroom study. While there, John took a “venturing” course which, among other things, required him to develop a plan for a new business. His choice of business, with Brendan’s participation, was a lobster distributorship. “We realized that the working lifestyle we so admired could not be sustained as we got older,” says John. “We could see that in the older men we had looked up to as kids. Being out in rough weather day and night, lifting traps and heavy equipment, and so forth, takes a huge toll on your back, your knees, your whole body.” There was also a clear economic reason for moving a step up the supply chain from harvester to distributor. Lobstermen are stuck selling a commodity product at a price dictated by supply/demand forces over which they have no control. They also feel the full force of bad harvest seasons and rising fuel costs. One or two years of low prices or bad harvests can force even the hardest working lobsterman to sell his boat and quit the business.