The Rise and Fall of Joe’s Crab Shack

Joe’s Crab Shack was once a staple of American dining, with almost 140 locations across the country in 2014. But today, there are only 57 Joe’s Crab Shacks still operating. What happened to this once popular casual seafood chain?

A Houston Original

Joe’s Crab Shack first opened its doors in Houston Texas back in 1991. The fun family-friendly restaurant quickly grew in popularity throughout the 90s and 2000s. While locals in coastal towns might have considered Joe’s Crab Shack a bit touristy, no one could deny that it served up buckets of steamed seafood and shrimp in a lively atmosphere. With its trademark newspaper-covered tables and encouragement to “break out your bib,” Joe’s Crab Shack dining was truly an experience.

Early Signs of Trouble

In the early 2010s Joe’s Crab Shack started making some missteps that may have led to its eventual downfall.

In 2014, the Center for Science in the Public Interest called out Joe’s for continuing to cook with unhealthy trans fats, despite a 2007 pledge to eliminate them. This bad press about the health risks of eating at Joe’s likely turned away many customers.

That same year, employees sued a San Francisco Joe’s location for labor law violations like unpaid overtime and breaks. The lawsuit gained enough publicity to further tarnish the brand’s reputation.

In 2015, an ill-fated no tipping policy led to dramatically decreased customer traffic. When tips were included in higher menu prices instead, revenue quickly declined by 8-10%.

In 2016, a racist lynching photo used as decoration in a Minnesota Joe’s sparked national outrage. Though quickly removed, the incident was yet another highly publicized scandal.

Expansion Gone Wrong

One of the biggest blows to Joe’s Crab Shack was a failed acquisition by its parent company Ignite Restaurant Group. In 2013, Ignite borrowed heavily to purchase the Italian chain Romano’s Macaroni Grill. But with 200 locations to manage, the merger proved to be disastrous.

Macaroni Grill rapidly declined in popularity just as fast casual dining started booming. As a result, Ignite ended up selling the chain at a major loss just two years later. The company never financially recovered from its overexpansion attempt.

Bankruptcy and Closures

By 2017, quarterly sales had dropped by double digits at both Joe’s Crab Shack and Ignite’s other brand, Brick House Tavern. That May, Ignite announced it was considering bankruptcy protection and looking for a buyer. Within just a few months, more than 40 Joe’s Crab Shack locations abruptly shut down with no warning. Employees often showed up to work to find their restaurants closed.

In June 2017, buried in debt from the Macaroni Grill purchase, Ignite Restaurant Group filed for Chapter 11 bankruptcy. Two months later, Joe’s original owner Landry’s swooped in to buy the company for $57 million in a bankruptcy auction.

Under Landry’s, Joe’s Crab Shack immediately shrunk from 140 to just 60 locations. But massive waves of unexpected closures had already soured both employees and customers on the brand.

Ongoing Issues

In addition to its very public missteps, Joe’s Crab Shack faced larger industry trends working against it.

As consumers became more concerned about eating locally sourced food, the likely imported seafood at Joe’s became less appealing. At the same time, families began cooking at home more often to save money.

When dining out, fast casual concepts grew in popularity while sit-down chains like Joe’s declined. And the discontinued Joe’s Crab Shack blog meant it faded from internet search results, missing out on potential online customers.

The End of an Era

While a Joe’s Crab Shack dining experience was once considered a fun night out, rising competition and self-inflicted scandals gradually diluted the brand’s shine. Efforts to reverse the downward trajectory with new ownership and smaller locations have so far failed. Only time will tell if Joe’s Crab Shack can make a comeback, or if it will continue disappearing across the American dining landscape.