This question was originally posted on Quora.com.
I can think of the following reasons.
1. Inferior taste Fish in the fish tank actually taste worse.
2. Size Some fish is just too big to keep in a tank.
3. Technically challenging (to keep the fish alive in a tank) Keeping fish alive isn’t what the restaurant staff is trained to do.
4. Cost Simply it costs too much
5. Inhumane Not everyone is comfortable with eating live fish.
6. It would take too long If the fish were too big, then it would take long to fillet
7. Too much Large fish would be too many servings resulting in the waste
Before I explain these, allow me to explain the reasons for a restaurant to keep the fish alive in a fish tank. I hope to understand these will help you understand the reasons why some restaurants choose not to keep them alive.
It adds entertainment value to the customers, given they feel comfortable and appealing, seeing they are about to eat what’s swimming in front of them. I find it (almost) funny that for most Japanese (myself included), when they see fish swimming in an aquarium, they will think, "Hmmm, that Hamachi looks yummy. " For this reason, seeing a live fish at a restaurant will provoke the same feeling.
Customers can look, choose which fish to eat, and approve before being cooked. It’s a bit like your waiter bringing a bottle of wine and have it examined by the customer before opening it. It’s a way to give assurance to the customers. The whole service adds value and experience.
This is particularly the case with shellfish, such as crab and shrimp. Once dead, they deteriorate quickly, especially crab. This is why you rarely see raw crab at the fish section at the market. They are almost always cooked. (if you see them raw at a market, then it's likely they are still alive, or will be sold quickly)
So, as long as the fish are alive in the tank, at least, they won’t get spoiled. This is good for the restaurant since they can order a larger quantity and keep it alive, avoid waste.
Added premium value
Because the fish is “alive” and “fresh,” the restaurant can add extra value to the price, which includes the maintenance cost to keep the fish alive in the tank.
Knowing the reasons to keep the fish alive, now, the Reasons NOT to keep the fish in the tank alive.
First and foremost, the live fish in a fish tank at a restaurant is, in most cases, inferior in taste to the fish that has been dead (given the dead fish was gutted correctly, cleaned, kept over ice).
To some people, this may sound contrary to the fact that the fish is "alive" and "fresh."
Here are the reasons why they taste inferior.
The healthier the fish is, the better it tastes
The bottom line is the healthier the animal is, the better it tastes to us, humans. So, if the wild fish was kept in a small fish tank, being cramped with other fish, receiving less exercise, less food, could you say its health is better or worse than when it was swimming in the ocean? It is less healthy.
In addition, the change in the environment will cause stress to the fish. Stress will affect the overall health of the fish, which will affect its taste. Imagine you were living in a large house and forced moving into a small house that is 10% of what you are used to, living with ten total strangers. Wouldn't you get stressed out? Would your health get better or worse? I know I would be stressed.
Not all the fish tastes better when they are fresh
I've written an answer to this (How does a top sushi chef age different fish?) and when it comes to the taste, you need to age the fish. For tuna, it takes at least a few days, up to one, sometimes two weeks of aging to develop the flavor after the fish is dead.
So, for the above two reasons, many restaurants (especially the high-end sushi restaurants), will never have the fish tank and keep the fish alive.
Some fish are just too big to transport alive. Swordfish, Bluefin Tuna, Alaskan Halibut, Opa is an example. Not to mention, having a fish tank large enough to keep them alive would make the restaurant size of an aquarium.
3. Technically challenging (to keep the fish alive in a tank)
Keeping the wild fish in the human-made environment creates a lot of challenges. One of the problems I've read is that bluefin tuna swims so fast and they sometimes unable to detect the glass (or the plastic at some aquarium) in the fish tank. Some of them swim right into it, die from hitting the glass.
For smaller fish, it may be less of a problem, but to keep any animals alive and healthy is another job on its own. There are enough things to do just to keep a restaurant running, so why add more work unless you see a great benefit in doing so?
Regardless of the size, it cost more to transport the live fish compared to the dead ones. As the size of the fish gets bigger, it even costs more. Of course, it costs more to keep them alive, all of which will be added to the price of a dish.
Imagine going to a farm and choose one cow to eat, then witness being slaughtered right in front of you. It could provoke uneasiness in some customers.
Because I grew up in Japan, watching some live fish being cut in front of me at a restaurant, I feel OK watching the whole process. However, I did notice some of my customers felt uneasy when I took out a live shrimp, removed its head. Its body was still moving as I peeled of its skin on the cutting board at the sushi bar.
I am also aware some people are not used to seeing a whole fish, especially its head, so for them, it is less appetizing, or could cause the feeling of disgust.
6. It would take too long
Assuming a restaurant could keep bluefin tuna alive in the fish tank, it would take (I am guessing) one to two hours to take it out from the tank, kill it, clean, fillet then turn into a dish. Would you wait for two hours for your piece of Tuna nigiri at a restaurant after you ordered it? I don't know about you, but for me, that's just too long of a wait, unless of course, that’s the whole part of a dining experience, like a dinner show.
7. Too much
Let's assume (again) we could keep bluefin tuna alive and serve at a restaurant. It would be just too many servings of tuna. If we were to convert the whole bluefin tuna weighing 100kg into Tuna nigiri, it would be around 2000 - 4000 pieces of tuna nigiri. That's a lot of nigiri to serve.
On a personal note, I have nothing against seeing a fish tank at a restaurant. I have ordered live shrimp, crab, and fish from the tank at restaurants before and I will continue to do so in the future because I'd like to enjoy the entire dining experience which the restaurant offers.