Catering is an untapped source of revenue and referrals for many senior living operators, Daniel S. Ogus told those attending a session on staying competitive at the National Investment Center for Seniors Housing & Care fall conference.
“Everybody has a kitchen that’s as well-equipped as most restaurants, and we have a lot of opportunities to be able to serve the public,” said the executive vice president and chief operating officer of Pleasanton, CA-based Cornerstone Affiliates, a family of companies that includes be.group, American Baptist Homes of the West, Beacon Communities and Seniority Inc. Ogus was with be.group before its merger with ABHOW was finalized earlier this year.
From contacts it made through catering a weekly lunch for 125 Kiwanis Club members in La Jolla, CA, he said, one of the organization’s communities started catering weddings, retirement parties and events in people’s homes.
“We started doing catering within our community,” Ogus added. “It was a discipline we had to learn, but by moving forward with catering and being able to go out to the outside world, it was bringing us in additional revenue with very little additional expense.” Expenses included food and some costs related to staffing and delivery, he said.
The catering business “was my push because we could grow the revenue,” Ogus said, “but one of the positive consequences that came out of it was, we started noticing in our [customer relationship management] that some of our referrals to the community were coming from catering. People said, ‘We saw White Sands at this event and decided to come in for our mom.’ And from that, we’ve grown that business.”
Ogus said that some of the organization’s communities now prepare food for local Meals on Wheels programs, an undertaking that has proven to be profitable. “We produce the food. We deliver the food to a center or the center comes to us,” he said. “The drivers are generally volunteers who take the food to seniors at home. Again, it also becomes a referral service for us for higher levels of care.”
Other efforts that can result in revenue for senior living communities:
- Convenience stores. “Most people say, ‘Well, we don’t have the space for a convenience store,’ ” Ogus said. “You can do a convenience store with a cart. You don’t need much to do a convenience store. All the products that are generally stocked in a convenience store or behind the front desk of a small hotel or a gift shop are products that all of our residents need, whether it’s toothpaste or soap or shampoo or greeting cards. There’s opportunity to generate additional revenue around a convenience store.”
- Special events. “We do lots of special events, obviously, for our residents, but we also market to their families to do gift baskets and holiday parties,” he said.
- Preloaded debit cards and gift cards. Cornerstone is implementing such cards “because we really push for guest meals,” Ogus said. “We want our programs to be good enough that resident families, instead of coming in and taking them out to dinner, want to come in and have dinner in our community. Guest meals have become a significant profit center for us, but selling the preloaded debit cards, we realized we get about 75% usage. So the cards get sold and they never get used at 100%.”
- Alcohol. Some Cornerstone communities have beer and wine licenses, and the organization is working to obtain them for all of its communities, he said. Such licenses enable communities to buy alcohol at wholesale rather than retail prices and then sell it for more than the purchase price. “It’s amazing how much wine we’re selling; it’s amazing how much beer we’re selling,” Ogus said.
- Food upselling. “We have ‘upsale-able’ foods in all of our dining rooms. You can have filet mignon or you can have rack of lamb,” he said, adding: “Operating income on those things is fantastic.”
Best practices for success
Procurement or point-of-service systems are key to realizing success from such programs, however, Ogus said. “You have to have systems where you can measure and you can make sure that what you’re doing is what you set out to do,” he added. “For example, you think you’re making money on upselling filet mignons, but if you’re not measuring that, if you’re not looking at what your true cost is and you’re charging $7 additional but you’re realizing that your cost is $7.50, that’s a problem.”
Ogus also recommended that communities not undertake projects they know they cannot do well. “Catering is a double-edged sword,” he said. “If you do it well, you have a great reputation. If you don’t do it well, it can really sink your reputation. We catered a carb-loading night before a half-marathon a long time ago, and we ran out of pasta. It took a while for us to repair our reputation.”
Cornerstone, the sixth largest nonprofit senior living provider in the nation, is trying to recruit people who work in the hospitality industry to work in its community dining programs, Ogus said. “Recruiting is the biggest crisis in our industry — finding people who are willing to come work in our communities, people who are willing to come and be leaders in our communities,” he said. “But we’ve got to find them in places that aren’t traditional places. Hospitality is a great place. Working in a retirement community is generally better than working in a hotel [and] certainly in a restaurant [with] nights and weekends. A late night, generally, in a retirement community on the hospitality side is 8 p.m.”
Competitive wages are key to recruitment and retention, Ogus said. “Whether it’s dining services or housekeeping staff or management staff, we have got to be competitive with salaries,” he added, saying that competitive benefits and clear career paths are crucial, too.
Fellow NIC panelist Brett Robinson, executive vice president of Seattle-based Leisure Care, advised senior living executives to review their job postings to ensure that they are appealing to potential candidates.
“A lot of job postings in seniors housing, they’re not screaming ‘hospitality,’ ” he said. “Read those as unbiasedly as you can and you’ll fall asleep.”
Robinson also recommended that attendees create a standardized approach to recruiting and interviewing and talk to people who impress them when they are out at restaurants and hotels. “Let them know you’re looking,” he said.