Which is the most popular meaning of the commonly used phrase "Best kept secret"?
- "It's best if this is kept secret, though other options are viable"?
- "This is the secret that is kept best of all secrets."?
...or maybe some other?
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In the first two examples you listed in your comment, I'd say that Best Kept Secret is idiomatic. It would be akin to saying something like, a little-known gem, off the beaten path.
So, if I heard
Joe's Pizzaria is the best kept secret in Little Italy.
I'd interpret that to mean that Joe's:
But it doesn't necessarily imply that Joe's wouldn't appreciate added business, or that locals wouldn't recommend the establishment. In fact, in the scenario I'm painting, if I were to ask a local, "Where's a good place to eat around here?" then he might respond, "You should try Joe's – it's a little hole in the wall, just up the street. Best kept secret in the neighborhood."
Unlike trade secrets, which are kept close to the vest, best kept secrets are often openly shared. In other words, it's a quaint expression, with a hint of oxymoron.
The common phrase "best kept secret" usually means "the secret that is kept best of all secrets."
The second interpretation is valid as well (albeit less common as a phrase)
EDIT: a good indication would be if the entire phrase is treated as a noun "The best kept secret in this company is..." or as a partial sentence "The ... is best kept secret"