Making the cut | Fish cutter extraordinaire Mike Coffill helps Ready Seafood rethink how seafood is bought and sold in Maine

Choosing the best haddock takes more than a casual look. That's the only reasonable explanation for why Mike Coffill is up to his elbows in a black plastic tote filled with ice and fresh haddock. Pawing to the bottom of the tote, Coffill frees a large haddock. He holds the fish belly up, pries open its sides like a book, and takes a deep sniff from the body cavity. "Yeah, they're okay," he says. Mike Coffill knows his fish.

At 25, Coffill is one of the best fish cutters in the greater Portland area, but you wouldn't know it just by looking at him. His baggy T-shirt and shorts, buzz cut, and gap-toothed smile befit a kid at a skateboard park more than they do a high-end fish retailer with two kids of his own. The tattoos curling down his forearms and disappearing into his orange rubber gloves don't do much to dispel the skateboarder image. But Coffill is a successful businessman and has been cutting fish for the last 13 years. He is currently in charge of buying, cutting and selling haddock at Ready Seafood in Portland, where he is also the operations manager.

Ready Seafood is a live lobster distributor on Hobson's Wharf, behind Becky's Diner. Brothers John and Brendan Ready launched Ready Seafood three years ago in Portland. The company deals mostly in lobsters, but recently got into the fish game after Coffill convinced them there was money to be made selling high-quality haddock filets to restaurants and other customers. At the time, Coffill was working as the sternman on John Ready's lobster boat, the Ms. Susan, where he described the ins and outs of the fish cutting business. "I knew nothing about haddock," Ready recounts. "The only thing I knew is that I used the excess for lobster bait."

Always on the lookout for new opportunities, Brendan and John Ready offered Coffill the space and the equipment he needed to run a small fish cutting operation under the umbrella of Ready Seafood. The company officially got into the fish business in January.

But the Ready brothers and Coffill figure they can buck the trend by approaching the seafood business in a different way: by focusing on quality rather than volume. "You gotta find a way to add some value," explains Brendan Ready. "There's no such thing as volume-driven business anymore — that's the old way. It doesn't work."

This concept is gaining ground up and down the Maine coast. Smaller coastal towns and fishing co-ops are struggling to compete in a global seafood market while at the same time dealing with ever-tightening rules on where, when, and for what fisherman can fish. As a result, Ready Seafood is relying on branding and "value-added" products as ways to set itself apart from the rest of the competition. "Why would [the customer] want to pay more for a fish?" Brendan Ready asks, pausing to let the question hang in the air. "That's why we're trying to show where the fish came from, who cut it. There are customers out there that care about that."

Team Ready
The Ready brothers, John, 26, and Brendan, 25, don't sport quite the same rough-and-tumble look of Coffill, but both are more comfortable hauling traps in oilskins than networking in business suits. The brothers grew up lobstering in Cape Elizabeth, but left Maine to earn business degrees — John at Northeastern University in Boston and Brendan at Stonehill College in Easton, Mass. They both graduated in 2004 and launched Ready Seafood that year.

But instead of just aiming to get as big as possible, as quickly as possible, the Ready brothers considered how they could approach the industry from a new direction. The strategy they hit upon was to sell less for more: The Ready brothers touted their high-quality lobsters, which they caught off rocky bottoms in cold water. The colder the water, the stronger a lobster's shell, and the Ready brothers caught hardy lobsters that could stand being out of the water longer than the weaker, soft-shelled lobsters caught in warmer waters.

As a result, the lobsters that the Readys caught could be shipped farther without compromising quality — and quality was of the utmost importance. The Ready brothers realized they could make more money selling their high-quality lobsters at a premium. "We got the same price as everybody else did, but we knew ours were better," Brendan Ready explains. "So we started marketing our own product, needed more of it, started buying from other people."

Pretty soon, the brothers were buying lobsters up and down the coast, and selling them locally, nationally and internationally. After just three years in business, Ready Seafood is on track to book nearly $10 million in sales for 2007.

The teamwork talk isn't hollow, either. The Ready brothers have backed up their support of Coffill with a financial promise that's unique in the seafood business: profit sharing. As operations manager of Ready Seafood, Coffill receives a salary. But he also earns a full 50% of the profits from the fish he cuts and sells. In return, Coffill takes care of everything from choosing the fish and setting the price to cleaning up after he is done cutting. He also is in charge of finding new customers willing to pay top dollar for high-quality haddock fillet — about seven dollars per pound this time of year, or roughly two dollars more than his competition.

Ready Seafood appears to be the only company taking this profit-sharing approach. But the Ready brothers and Coffill say the strategy works because Ready Seafood is relatively small, and because Coffill is in control of every aspect of the fish cutting. Others in the industry agree.

John Norton, president and CEO of Portland-based Cozy Harbor Seafood, explains that most companies in the industry pay their cutters a more traditional rate-based salary. Cozy Harbor, for example, offers its six to eight cutters a competitive mix of hourly rates, productivity incentives, and employee benefits. With that many cutters, Norton says, it is impossible to give each individual a say in the buying and selling prices of the fish they cut without compromising the viability of the company. Since those cutters can't set their own prices, it makes profit sharing less appealing than a set of guaranteed benefits.

The profit question
The decision to add fish sales to Ready Seafood was based on a mix of instinct and business intuition. The Readys saw haddock as a means to diversify the company's products, and also as a dependable source of the bait the lobster industry relies on. They also saw the benefits of recruiting another hard working individual to Team Ready who shared the brothers' high standards for quality.

In Coffill's first year cutting for the Readys, he started out at a flat rate. "I told these guys, 45 [cents a pound] and I would do it all — cut and skin and clean up everything, which worked out good." He pauses briefly before continuing, "but it didn't for them because I would sell the fish no matter what."

"No matter what" meant that Coffill and the Readys were trying to fight their way into a highly competitive market. In order to gain new customers, Coffill had to price his haddock fillets competitively, at times underbidding the inferior quality product of his competitors. So while Coffill was buying quality fish at higher prices, he was turning around and selling the fillets at reduced rates. He says this made for a couple of months where the Readys lost money because his flat rate was eating into the slim profit margin. "So this year we came up with the idea to split it 50-50," Coffill explains. "That way, it would get me to try to get more for the fish, and that way I could make more money too."

To the Readys, the decision to move from a flat rate to profit-sharing was an easy one. "We wanted him to be here, with us, at Ready Seafood," says Brendan Ready, "and this was a way for us to get him more money. We don't know a whole lot about the fish. And we've seen what he knows. It's time to give him responsibility, and we knew we'd make more money. And we have."

In his second year of cutting for the Readys, Coffill has gone from a 19% profit margin in 2006 to 32.5% in 2007 — an increase in overall profits from roughly $30,000 to just over $80,000 on just an 11% increase in product volume.

Meanwhile, the deal has been understandably good for Coffill, who has nearly doubled his earnings per pound from the previous year when he worked for a flat rate. And after a slow first year, Coffill has assembled a roster of customers who rely on his fish.

Dave Wilcox, owner of Ken's Place restaurant in Scarborough, is one of those customers. He says that Coffill is one of the best cutters he has ever come across. "I've been in the restaurant business for 25 years now," he says, "and I haven't found any nicer fish than what Coffill has to offer."

Wilcox says it isn't just the high quality of the fish that makes the extra cost worthwhile. In a business where even a few fish bones can ruin a diner's meal, the quality of the cut is of high import. "With [other cutters], for every four or five fish I serve, I find a bone here and there," he says. "With Mike, that's very rare." In fact, in the nearly 5,000 pounds of fish he has bought from Coffill in the past year and a half, Wilcox says he can remember finding a few pieces of bone only five or six times.

Now, word is getting out about Coffill's cuts, even among the top crop of seafood dealers in southern Maine. "Like today — Browne Trading came up to me and asked 'Hey, do you have any haddock?' They came up to me and asked me for haddock," says Coffill. "That's a big thing."

Paying a premium
The Ready brothers and Coffill have considered the cost of growth, too. Fact is, they don't want to get much bigger. "We don't go after the market where everyone is and compete on volume," says John Ready. "We have a nice little niche and it works."

Ready goes on to say that apart from hiring another cutter and gaining a few extra customers for the fish fillets, neither the lobster nor the fish portions of Ready Seafood are looking to grow. Instead the Readys are looking to dabble in new ventures, including a new way to market lobsters in an ever-competitive market. The company's "Catch a Piece of Maine" business is set to launch Oct. 1, and according to Brendan Ready, will significantly alter the way consumers interact with the lobster industry by allowing customers to own shares in a lobster trap.

Coffill agrees that the way forward doesn't include getting much bigger. He talks about adding a few extra cutters to free up time to look for new customers, but is quick to point out that success hinges on staying small. "Keep it small, to where you can keep the quality," he says. "They say every time you add a person to your fish line you lose one percent on your return."

It always comes back to quality. It is a lesson from which the entire fishing industry can benefit. How do you make more from less? The Readys and Coffill are trying to do so by ensuring the best quality.

Most in the industry agree there will always be groundfish. But as the fish become scarce, they will become more expensive. After decades of overfishing, groundfish landings in Maine have been on a steep decline since the mid-90s. Landings of cod, the most lucrative member of the groundfish family and a relative of haddock, fell to 1.5 million pounds in 2006 from a peak of 21 million pounds in 1991. As fishermen are permitted to catch fewer and fewer fish to allow the stocks to recover, earning more for what fish they do catch will be critical. "I think the guys who are concerned with quality are going to be the type of [customers] you want, because they will continue to buy it," explains John Ready. "It's going to be a lot more expensive — there definitely will be a premium — but those guys aren't going away.