Lobster prices are diving, but not in restaurants

Despite a glut on the dock, diners aren't catching any break when they order the delicacy from a menu.

By Aimee Picchi Aug 20, 2013 2:00PM

Lobster on a plate (© Alexandra Grablewski/Lifesize/Getty Images)An explosion in the lobster population has led to diving wholesale prices for the crustaceans. But don't expect to see those savings reflected on your restaurant bill.

While consumers might be paying less when they buy the critters from their local fishmongers, restaurants are keeping their lobster roll prices high, the New Yorker's James Surowieki notes.

At Darden Restaurants' (DRI) Red Lobster, for instance, the Ultimate Feast dinner -- a platter filled with lobster tail, crab and shrimp -- is the priciest item on the dinner menu, at $25.79. Adding a Maine lobster tail to any meal will set you back $14.29.

That's despite a plunge in wholesale prices, which has Maine lobstermen receiving about $2.20 per pound for their hauls. That's down from about $3.19 per pound in 2011, according to the Kennebec Journal. 

The reason for the stubbornly high restaurant prices comes down to economics and marketing. 

For restaurateurs, cutting the prices of their lobster dishes could backfire if costs once again rise, ultimately pinching their bottom line. Worse, if customers became accustomed to cheap lobster, they might revolt at seeing higher prices later. 

But the bigger issue, Surowiecki notes, is the perception of lobster as a luxury good. Decades of marketing it as a delicacy means restaurants can and will charge a premium.

The emergence of lobster as a high-end food is an about-face from its place at the bottom of the culinary totem pole for much of America's history. During the Revolutionary War, British prisoners reportedly revolted after being fed an excessive amount of lobster.

Now that Americans have elevated lobster to a delicacy, restaurants aren't eager to discount their prices, because that would undercut the message that a dish of, say, lobster risotto is worth several dollars more than plain risotto milanese. 

And even though consumers may grumble, research shows they report enjoying products they're told are more expensive. In other words, that $20 lobster roll might not taste as sweet if it carried a buttered-roll price.

Follow Aimee Picchi on Twitter at @aimeepicchi. 

More on moneyNOW

Aug 20, 2013 2:54PM
The farmers and fishermen are not getting rich these days but the middlemen are gouging as usual. Some things never change! As for the restaurants, even thought he economy has been weak since the bubble burst, the landlords continue raising rents and the tax man has not given any slack.
Aug 20, 2013 8:32PM

What a bunch of baloney ,it looks to me that its business as usual for the fat cats

holding up the nation with their greed.

Aug 20, 2013 5:30PM
$25 is not bad for an entire meal, unless of course the meal is at red lobster.
Aug 21, 2013 7:59PM
BS.  It is stiffing the customer and nothing more.  Stop buying lobster at restaurants and go to the seafood markets and buy direct.    Tell ed Lobster and the others to stuff it up their kazoo.  The fishermen are not making a dime more.
Aug 20, 2013 4:02PM

Overpriced, overrated and another repetition of an Article...


Why not do one, on wet toilet paper and Sears catalogues.?

At least we can bitch about Sears.

Because now, I think they sell wet toilet paper....Sweet Geezus.. 

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