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Damage by small herbivores can have disproportionately large effects on the fitness of individual plants if damage is concentrated on valuable tissues or on select individuals within a population. In marine systems, the impact of tissue loss on the growth rates of habitat-forming algae is poorly understood. We quantified the grazing damage by an isopod Amphoroidea typa on two species of large kelps, Lessonia spicata and Macrocystis pyrifera, in temperate Chile to test whether non-lethal grazing damage could reduce kelp growth rates and photosynthetic efficiency. For L. spicata, grazing damage was widespread in the field, unevenly distributed on several spatial scales (among individuals and among tissue types) and negatively correlated with blade growth rates. In field experiments, feeding by A. typa reduced the concentration of photosynthetic pigments and led to large reductions (~80%) in blade growth rates despite limited loss of kelp biomass (0.5% per day). For M. pyrifera, rates of damage in the field were lower and high densities of grazers were unable to reduce growth rates in field experiments. These results demonstrate that even low per capita grazing rates can result in large reductions in the growth of a kelp, due the spatial clustering of herbivores in the field and the selective removal of photosynthetically active tissues. The impacts of small herbivores on plant performance are thus not easily predicted from consumption rates or abundance in the field, and vary with plant species due to variation in their ability to compensate for damage.