OCEAN CITY, MD. -- When Brice and Shirley Phillips came here in 1957 from a strip of Eastern Shore marshland called Hooper's Island, they say they had no dreams of creating a seafood restaurant empire.
"We just wanted to sell off some of the crabs from our packing house in Hooper's Island," said Brice Phillips of the four-seat crab stand the couple opened with $2,000.
Thirty-three years and 4,400 restaurant seats later, the privately held company is among the largest-grossing family restaurant chains in the country, and it's moving in new directions.
Phillips has been test-marketing its own line of supermarket products since last year, and this week will open its third seafood processing plant, in the Philippines.
Last year, the six Phillips restaurants served nearly 1.7 million seafood dinners -- 8,000 crab cakes a day. The 800-seat Phillips restaurant at Baltimore's Harborplace ranked third in the country with gross sales of $15.9 million in 1989, according to Restaurant Hospitality magazine's May survey, behind two New York fixtures -- the Rainbow Room and the Smith and Wollensky steak house.
Not far behind were Phillipses' 1,200-seat Flagship in Washington and its 500-seat Phillips Waterside in Norfolk.
The Phillipses average two calls a week from developers who want a Phillips restaurant in their projects, but in most cases they politely turn down the developers, for reasons that seem to typify the family's approach to all of its businesses.
"You lose something when you grow too much," said Shirley Phillips in a recent interview. "And I don't mean just control, but also the enjoyment, and we don't want to do that."
The same caution is evident with the line of supermarket products that Phillips, following in the footsteps of successful Maryland competitors such as Wye River Seasonings and Chesapeake Bay Seafood Co., is selling in the Washington and Baltimore areas.
"We're taking it slowly and doing it region by region," said Steve Phillips, 44, the company president and son of Brice and Shirley Phillips. "Eventually, we'd like to go national. But right now, we're not equipped to do it nationally. We're equipped, basically, to do a good job in this marketplace."
Lee Easton, vice president of marketing for the Super Fresh chain, which is carrying Phillips products in 144 Maryland and Northern Virginia stores, said the line is selling well against such national brands as Mrs. Paul's because the Phillips name is well-recognized in the region.
Phillips withdrew one product that wasn't selling, but says its cocktail and tartar sauces are outselling all other brands combined in the test area. Steve Phillips said the company plans to introduce 20 more items in the next six months. Within a year, he hopes to expand out of the Baltimore-Washington area.
Phillips has done well as a niche marketer with a strong local identity, and has benefited from a grocery industry trend in which small, specialized companies can thrive, Easton said. "If they take their products out of the area, they will have a more difficult time because they won't have such strong name recognition."
Steve Phillips and his wife Olivia have taken an increasingly active role in the day-to-day management of the Phillips businesses and their 2,200 employees over the last few years, and the supermarket venture is one of the new directions they have set. Another is a growing reliance on imported seafood.
Mark Sneed, general manager and director of operations of Phillips's Flagship Restaurant on the Southwest waterfront in Washington, said the chain uses 750,000 to 800,000 pounds of crab meat a year, and it was growing more difficult to meet that need locally.
Rising demand and prices had created "a crisis" for a company that prided itself on its affordable menu, said Brice Phillips. They also led to changes in the seafood market. "It's a global market now," said Steve Phillips. "Ten years ago we got all our seafood locally."
Phillips began going overseas for seafood about five years ago, doing business in Thailand, China and Indonesia, which have more experience in seafood farming.
The search led Phillips to the Phillipine island of Cebu and the community of Bantayan.
While crabs -- larger than the fabled Chesapeake blue crab but similar in taste -- are abundant in Philippine waters, most Filipinos could not afford what they cost in local markets.
Sneed said the Cebu plant will cook and process crab meat to be shipped in two-ton refrigerated containers for use in such Phillips restaurant staples as crab cakes and crab imperial. The island already hosts other seafood processing operations.
Phillips is training Filipino workers to grow clams, oysters and mussels for export. Sneed said the company also is seeking to develop a supply of soft-shell crabs from the Philippines, and plans to export what it can't use to Japan or South Korea.
The restaurants that the new plant will supply remain the core of the Phillips business and they still are a hands-on operation for Brice Phillips, 69, and Shirley, 67. "We eat here every day we're in town," Brice Phillips said, sitting in his office on the third floor of the Phillips Crab House on 20th Street, where the original four-seat crab stand was located.
It was more hands-on in the early days, when the Phillipses slept on bunk beds in the kitchen and their mothers did the cooking. For 12 years, they added a dining room a year, lived in the building and worked 17- and 18-hour shifts. Sometimes, Shirley Phillips said, they wouldn't go outside for days.
In 1973, the Phillipses bought the Beach Plaza Hotel on Ocean City's boardwalk and opened a second restaurant, Phillips by the Sea. Four years later, they opened a Phillips Seafood House in north Ocean City.
The Rouse Co. lured them to Baltimore's Harborplace when it opened in 1980 and three years later Phillips started another restaurant at the Waterside in Norfolk, also a Rouse project. The Phillips Flagship in Washington was launched in 1985.
Today, about a third of the restaurant business is done in Baltimore and about a third in Ocean City, according Paul Wall, company vice president.
The family still keeps relationships with the employees on a personal level. The waiters and waitresses, many of them college students who are provided summer housing through the company, call the owners by their first names.
Part of the Phillipses' informality reflects their Eastern Shore friendliness, and part, their awareness of the business sense of listening to the people who deal directly with customers. "They're the ones who represent our family, our business, to the public," said Steve Phillips. "So we meet with them, we want to know what they hear, what the customers like and don't like. You can't underestimate their importance."
These days Brice and Shirley Phillips spend about half of their time traveling, and recently returned from an economic development mission to Eastern Europe and the Soviet Union with a longtime friend, Maryland Gov. William Donald Schaefer.
Although Brice Phillips said he thinks about retirement every day, his son Steve laughed at the suggestion and recalled buying his father a set of golf clubs that sat untouched for years and finally rusted through.
"Brice and Shirley will never retire," he said. "This is their whole life. You don't leave something that you love ..."