Contracted Dining vs Self-Operation

Contracted Dining Vs. Self-Operation

Contracted Dining vs Self-Operation

Mike Peacock: Hey, everybody. Welcome back to Cosmic Soup. I am excited to have you here today because we’re going to talk about something that is sure to hit more than a few hot buttons, and it’s a topic that comes up almost daily here at the 3rdThird mothership and Culinary Coach HQ.

I am, of course, referring to the eternal debate between contracted dining and self-operation.

Joining us today is a very special guest. He brings an extensive long-term background in senior living, especially with contracted dining. He’s going to share some much-needed insight on what to look out for when considering which route to take with your dining operation. Please welcome to Cosmic Soup our new vice president of culinary and operations, Scott Daniels.

Hey, Scott! Thanks for joining me here in the Soup today. Welcome to the 3rdThird and Culinary Coach teams. We are absolutely stoked to have you here.

Scott Daniels: Well, Mike, thanks. I can’t tell you how much or how excited I am to join the 3rdThird team. It’s going to be an adventure.

Mike: Yeah. [Laughter] Every day is definitely an adventure. That is for sure.

Before we get kind of rolling into the meat and potatoes about what you’re all about here, let’s get a little bit of background on you. I know kind of where you came from and what some of your history is but, for our listeners, shed a little light for us. Tell us about how you got involved in the senior living industry and what you’ve been doing for the last 20-something years.

Scott: Sure. Well, Mike, I’m a certified executive chef and was in the restaurant industry for many years. Then one of my clients (or customers became a client) came to me and asked me to join – they were using a contract provider – and wanted me to run their food service in a B&A account (business and industry), a large credit card bank. So, I did that, and I did that for a couple of years.

Then the company that I worked for came to me and asked me to provide some culinary support for their senior living segment, of which I knew nothing about. Of course, I jumped in the pool. I took on the challenge.

And I’ll tell you. The first six months were a little bit scary because I didn’t know the lingo. I didn’t know the environment. I didn’t know aging individuals that well, other than my immediate family members. So, it was a jump of faith and, 25 years later, I’m still in the senior living market.

Mike: [Laughter]

Scott: What I’ve done for the past 25 years in senior living, for the longest time I was director of culinary for the contract company that I work for, one of the big three in the country. I morphed over and became a district manager overseeing a large portfolio of senior living accounts, primarily continuing care retirement communities, some assisted and skilled nursing facilities along the way. Then I was approached by 3rdThird and made the jump to the opposite side of the fence, so to say.

Mike: [Laughter] Yeah, it’s kind of a crazy set of circumstances that that whole thing came about. But what we are interested in exploring with you today is of course I guess the mythos of the food contracting side of the business.

Now, as we all know, food contractors provide a very large number of services to the industry and there are pluses and minuses. As you’ve been made aware, a lot of what we end up doing at 3rdThird is talking with customers who may not be happy with where their business has gone in relation to having contractors control so many elements of their business.

For those that aren’t 100% aware, can you give us a quick breakdown? What is the main role of a food contractor and why are they so initially appealing? What makes people want to choose a contractor versus self-operating or at least just controlling their own food service program?

Scott: Sure. That’s a great question, Mike. I think there are a couple of reasons.

One, the first reason is when a new CEO or executive director goes into a community and there’s already a contracted food service there. They oftentimes just stay the course. There’s no need to change. That’s the way it’s always been so, therefore, we shouldn’t change it.

But what I find is the biggest reason that communities go to a food contractor is there are typically some major problems within the dining department. That can be lack of management, overturn of management, financial driven problems, high food costs, low resident participation in meal plans and programs. It can be a wide array – any number of things.

I think they look at contract companies as like going to the doctor. The doctor comes in with a big back of tools and resources and fixes the problem and makes them healthy again, makes the department healthy again. They come in and they do. They have a lot of resources. They have a lot of tools that can help the account.

But what I think happens is, just because they have tools and resources – and this is all the contract companies – it doesn’t mean they’re going to be utilized in the account once you partner with them. At the end of the day, any community (with or without a contract) the partner is only as good as the team or the boots on the ground at their community.

Mike: Yeah. I have got that perception several times at the places I’ve been in where the contractors are viewed as you’re just going to save the day like a magical food superhero swooping in and fixing all of your problems. But the reality is there still has to be worked involved and communication between the contractors and then the (I guess we’ll call them) onboard, regular staff. That’s kind of where some of that starts to fall apart, right?

Scott: You know it is. It’s kind of funny. I would oftentimes get a call from a community that we had partnered with (when I was in the contract world) that they would have a problem. It could be a staffing problem, as everybody is facing today.

They would call and say, “Hey, listen. You’re our contract provider. When does your magic school bus show up with all of the employees that we need?”

That’s just it. Contractors don’t have a magic wand. They don’t have the answers to the questions. They have a lot of tools and resources, but it just doesn’t always stick.

It’s like paint on a wall. Just because you have it doesn’t mean it’s going to take hold. Again, you’ve got to be there driving the program.

I will tell you; I’ve been in many, many CCRCs around the country and they’re all operated differently. Good, bad, or indifferent, they’re all uniquely different (one from another) and not one tool will fit all of them. It’s no different than anything else we deal with in society.

I could build tools that are great for one community. You take them to the next community and they could fail, fall flat on their face, so you’ve got to be flexible. You’ve got to have dexterity to make things happen that are going to benefit any community.

Mike: Yeah, absolutely. Another thing that I seem to have noticed – and correct me if I’m wrong. Maybe my observation is misguided – I have seen (or perceived that I have seen) instances where maybe some of the higher-level management, the executive team, or maybe some of the head dining department people just either don’t have the knowledge of what it takes to run a dining department, they’re not comfortable with it, or they just don’t want to do it so they think, “I will just have these people do it and then I don’t have to worry about it.”

Scott: Well, Mike, you really kind of hit the nail on the head. What I often found is that leadership in the C-suite of a retirement community oftentimes will bring in a contract provider because they don’t want to have anything to do with the dietary department.

As we all know, the dietary department is just not a dining room serving three meals a day. There are a lot of attributes.

Mike: Right.

Scott: There are different levels of continuum of care. There’s catering. There are special functions. There’s marketing.

They don’t want to be involved in that. At least they think they don’t want to be involved in that, so they bring in a contractor.

I think that’s the worst thing anybody in leadership at a community can do is take the backseat to one of the biggest departments in their community. When I say biggest departments, oftentimes the financial component of the department is typically one of their top three highest dollar amounts on their budget for the overall community. Food touches every resident in a community, and not everything in a community does that.

From a marketing standpoint, always one of the top three questions a potential new resident asks questions about is the dining department, is the meal program. That’s important to them as a driver of a decision-making process of moving into a community. I think that’s the biggest mistake the C-suite in a community can do is to not be involved – even if they have a contract company, even if they make that decision.

Let’s be real. Contract companies aren’t all terrible. They do have some good business. There is a need for them in some cases. But it’s not the answer to every problem out there.

I really think that leadership within a community, even if they’re contracted, needs to be intimately involved in the dietary department. They should be walking through the kitchens, the dining rooms on a regular basis. They should know all the staff.

Their dining managers should be seated at their leadership table. At the management group, they should be a voice for the overall community as well.

Mike: Yeah. Yeah, definitely. Food is such a crucial part, and I think sometimes what ends up happening is now that some of the leadership is so hands-off, the accountability factor is gone. The quality (if it was there to begin with) really starts to slip downhill, and that’s where a lot of problems start arising. As you and I have talked about, sometimes once people get locked into that contract, a lot of issues start to pop up; hidden costs or maybe other little contractual stipulations that maybe people didn’t see that sneak up on you.

Now that you’re on the other side of the screen, what are some of those insights you can provide? What are some of those hidden line items that do tend to sneak up on people?

Scott: Sure. Well, I think the first thing with a contract company is, when they do partner with any community, they immediately start to create a barrier to exit. They do everything possible to make it impossible (or at least from a thought process, impossible) for a C-suite or a client to then break away from a contract.

They come in with the offer of, “We can solve all your problems. We have an answer to every problem you have; we have a solution.”
“That’s exciting. Wow. I can bring them in and I can take that off my plate. I don’t have to deal with anymore.”

Then once they’re in the door, number one, things don’t happen as fast as any contractor says it’s going to happen. The expectation is (coming in) that my problems are going to be fixed within a month. That’s never the case. Sometimes it’s six months, it’s a year, it’s never. It just doesn’t go the way it’s supposed to go.

Then the provider provides the first monthly bill. They’re sticker-shocked because it’s not necessarily what the contract said. There are always hidden costs, hidden expenses that might or might not be fully hidden but—if you didn’t read the contract page-to-page and you didn’t understand it or get answers to questions—you’re stuck with it once you sign it.

Now, I say you’re stuck with it. You’re not. Every contract from a provider has an out clause or a termination clause. You need to know what that clause is. It could be 30, 60, 90 days. It could be without cause. It could be with cause. It could be with a repair clause, meaning if something is broken, we have X amount of time to correct it.

Here’s an area where there are some hidden costs. When I say hidden, it doesn’t mean the contractors are lying to you. They’re just costs that are buried in different line items that you don’t necessarily always see.

Many of your providers will want to go full service, meaning that all the hourly staff are on their payroll. Typically, it’s managers, the department heads are on the contractor’s payroll, but they really would like to get your hourly staff on as well because what they do is they charge you a greater tax and benefit percentage than you’re paying at that community. If you’re the CEO of a community and your tax and benefits percentage is, let’s say, 25%, you then all put all those employees over on the contractor side, that tax and benefit percent, I’ve seen it as high as 35%, 36%.

Mike: Dang!

Scott: That’s all hidden profit for the contract company because I will guaranty you that their tax and benefit rates are lower than most communities’ tax just because of volume. They’re all so large. They’re large corporations. They drive discount by volume, so that’s a huge profit center for them. It’s also an additional charge for you, the operator, because whatever the difference is by percentages, you’re now paying that each month on your monthly bill.

Then there’s purchasing. Oftentimes, the contractor will come in and state that they have purchasing power, “We drive purchasing volume, so we get a better price.” They might get a little better price on some items, but where the better price is coming is behind the scenes going back to your provider, your contract provider, through their purchasing department as additional profit.

What I mean by that is, if you buy a million dollars’ worth of food at your community a year, they might make 6% to 8% of that sale back to them. You the client never see that. That’s just a discount to them, and they’re getting that because of the volume.

All the contract companies buy so much food annually that they drive a better price. It’s supply and demand. It’s no different than anything else in the world.

But you’re not getting that discount. They are. So, they’re making oftentimes as much if not more money to the bottom line off of purchasing than they are charging you a fee. They might give you a reduced fee to manage your business and you think that’s great. They’re making a lot more money than the fee they’re charging you: tax and benefits, the purchasing dollars.

Also, there are a lot of hidden expenses in your budget. Go through your budget that was provided by your contractor. There’s a lot of what I’ll call miscellaneous expenses.

Mike: [Laughter]

Scott: That can encompass everything. There’s oftentimes travel built in. You’re paying for that whether you use it or not.

Then you’re paying for support. Well, to me, if you contract a company that promises you they have all the tools and resources and support, that’s great, but you end up paying for that. If you need somebody to come in and help with a program – it might be changing your memory support program – you’re going to pay for that person to come in. It’s not part of the budget or the contract that you signed.

There are a lot of areas where there’s a lot of money being made by the contractors. They’re all the same in that regard. Maybe a percentage or two off (up or down), so I’m not picking on any individual contractor. But they all do the same thing. That’s a standard business practice for them.

Mike: You hit on something that’s close to my heart and an issue that I have seen and heard brought up many times, which is—speaking of purchasing, volume, and things like that—a lot of times the contractors are dictating where all of your food comes from. They are in charge of the product selection, which in most cases means that you as a community don’t have the ability to source your own products.

That is a detractor for a couple of reasons. Number one from a cost-competitive standpoint. But also, it negates the ability to be able to select, say, local vendors, local artisans, farmers market stuff, and just any other number of factors that gives you that truly creative control over how much your stuff is going to cost and where it’s going to come from.

Scott: That’s correct, Mike. Let’s be honest. Everybody is going to use a broad line vendor.

Mike: Sure.

Scott: Your Sysco of the world, your U.S. Foods, your Gordons, your PFGs. But with the contractors is they hard spec just about every product that they have. When I hard spec the product, they’re hard spec’ing the vendor as well.

In any geography, you’re going to have typically a bread vendor, a single bread vendor that you have to buy all your bread from. Even though you might like bread from a local artisan or a local bakery or even just somebody closer that the residents really have a fond memory of that they desire, you just don’t have access to that. The purchasing is blocked. It’s what the call locked down.

Your meat company, you’re going to have to buy everything from one vendor and it might not be a vendor that’s close to you. They might be a couple hundred miles away, but that’s the contracted vendor.

The reason they’re contracted, there are a couple of reasons. The first is finance. It’s driving finance. The more business they drive to one vendor, the more money the contractor makes.

It’s also tied to safety. That’s always a concern because you have to be careful buying from any mom and pop on the street. Any community should do their due diligence to make sure they’re buying from a reputable vendor that’s handling food in a safe manner because, to be honest, the residents are a susceptible group that we’ve got to make sure they stay healthy.

We can’t make every decision based on dollars and cents, and that’s what typically the big contract companies do. It’s strictly this is what you get. When you open up an account, you go through purchasing, and they send you the list of your vendors. Here’s your vendor for ice cream. Here’s your vendor for bread. Here’s your vendor for grocery. Here’s your produce vendor.

The operator, the resident, the administrator really have no say in that. You signed the contract. We’re managing your business. You get what we want. Then it even gets a little more hard spec’d than that.

Let’s say you’re using chicken breast A. This is a hypothetical – any brand chicken. But all your residents like chicken breast B. It really doesn’t matter what your residents want at that point because the hard spec is chicken breast A and that’s what they’re going to get.

The customer almost loses the impact of involvement of what they’re getting. Now, I understand, in a retirement community, you can’t give every resident a different spec. That’s just not realistic.

Mike: Right.

Scott: But you’ve got to have some choices or be able to make some choices. If the majority of the residents like a certain product or they like a certain bread, they like Mrs. John’s bread which is baked in the town where the community is and that’s what everybody loves for years, you should be able to get that product for them as long as it’s a safe vendor, that they’re regulated, and all the legalities.

But it’s very hard to tell a resident, “You can’t have what you want,” and it’s right down the street, it’s available, oftentimes cheaper and better quality, but you can’t get it because it’s not the spec of the contract company, which is very disheartening.

Mike: Yeah. No, that’s an issue that you and I both being chefs, the one thing that we are kind of notorious for is being kind of overloads of food selection, right? We want to pick the eclectic stuff, the cool stuff, or the creative stuff.

When you look at today’s modern iteration of senior living dining venues, the trend is shifting towards more modern things. People are watching the Food Network. They’re watching all these cool documentaries. Home chefs are a thing.

People want higher quality and they want to support their local stuff or have the whole kind of farm-to-table kind of vibe. If the people that are running the dining operation don’t really consider that as a factor, then that’s just an entire element that residents lose out on.

Scott: Absolutely. You know it’s funny. I had a few accounts that had very large resident-run gardens. When I say gardens, they weren’t gardens. They were mini-farms.

Mike: Yeah.

Scott: They produced phenomenal produce and wanted to serve it in the community – free. Here it is. It’s free. Use it.

The company I worked for wouldn’t allow it unless they met set criteria, which was almost impossible to meet. It was again a barrier to access, a barrier to use.

Here all these residents, they grew all this great produce and they wanted to share it with the rest of the residents because it was the best product of season, local, picked fresh. The footprint was literally 200 yards, 300 yards away from the kitchen it was being produced in. It was almost made impossible to use without jumping through hoops.

I think most people want to use fresh and local. That’s all you hear today is fresh and local. Every town has a farmers market in it now. Even cities have farmers’ market with fresh produce, and who doesn’t want it?

I mean my wife and I went out and picked fresh blackberries this past weekend. Number one, the quality was amazing. We paid $2.50 per quart for fresh (we picked) blackberries. You can’t beat the price, but you can’t beat the quality. I think communities want that liberty and freedom to be able to do that when it’s available to them in their own communities.

Mike: Yeah, at least on a format for running a special or something like that. Maybe your entire operation is not going to be based around that.

Scott: Correct.

Mike: But just the ability to do it when it’s right is a huge factor.

Scott: Correct.

Mike: Quality being an issue, selection being an issue, pricing being an issue. There are a ton of reasons, obviously, that people might decide to go down the road of the contractor.

Now, one of the things that I hear the most about – because I’ve had to consult on issues that have been brought to me – is how do we hold the contractors accountable, whether or not it’s because of a staffing issue or whether or not they’re just not delivering on the things that are being promised.

Scott: That’s a good question, Mike. What I often found through the years with contractors and dealing with companies, I think the clients need to understand that that operation is still in their facility. It’s their house. It’s their building. It’s their kitchen, their dining rooms.

It’s their staff. Even if the staff are contracted payroll, it’s still their staff. Now, that creates challenges.

What I think happens is if you call, if Mr. and Mrs. Administrator calls their contract company and says, “Hey, listen. We’re having struggles. The food doesn’t get out on time,” or “They’re always out of something,” or “We have no staff,” it could be any litany of things, “Fix it.”

Well, that’s easier said than done. It’s easy to call the Bat Phone and think you’re getting Batman and Robin on the other end.

Mike: [Laughter]

Scott: They’re going to fly in and fix the problem overnight. It’s just not going to happen.

It’s no different than if you’re a self-op and you have that problem. You’re not going to be able, as an administrator, to fix it overnight.

Problems are problems. They happen, whether you’re self-op or contracted. It’s how you choose to fix them.

Now, oftentimes, if you’re contracted, you’ll think that that magic school bus – you know, “I’ll call the contractor company and they’re going to send in an army of people to fix my problem.” Well, I’m going to be honest with you. Over the last ten years, I think all the contract companies had big pools of extra managers and support people. We’ll call them support teams that weren’t necessarily assigned to a particular account. They were there and they floated around.

I will tell you that most of the contract companies have pretty much eliminated all of those positions, if not most, because of cost and overhead. If you look around, everybody does more with less and it’s no different with the contract companies.

They might come in and sell you on, “We have all these great tools and resources and people,” but they really don’t. They don’t have people sitting on a bench waiting for that phone to go off, slighting down the fire pole, and off to your account for a week or a month. It’s just not reality.

I’ll tell you what reality is. When you’re in your account, if you’re the administrator, you need to be involved (whether you’re contracted or not). You need to be more intimately involved in the dining operation. You should be walking the facility. You should be talking to your executive chef, your dining room managers, your hourly team members on a daily basis.

When you go down in the morning, go down and get a cup of coffee and spend five minutes in the kitchen or in the coffee shop or any of the food outlets you have. Get to have a better understanding of them. Have a pulse of the department. That way you’ll know if there’s a potential problem coming. You’ll hear about it.

Oftentimes, with a contract company, they try to hide as much negative or problems from the client as possible, which is never a good thing. Transparency, to me, always works. Sometimes they do that, but oftentimes they try to hide and fix. A big industry term for contract companies is, “We’ll just beg for forgiveness.”

Mike: [Laughter] Right.

Scott: If we’re over budget, we’ll have excuses and we’ll say we’ll do better next month. Whether that works or not, that’s a different story, but it’s easy. Once they’re in the door, it’s easier to beg forgiveness than it is to beg to get a contract signed.

Mike: Yeah. All that being said, let’s say that you’re in the midst of a contract, right? As an operator, you decide to go down the road to switch to self-operation. What should people be prepared for in order to do that? What does that process look like?

Scott: Sure. I think the first thing you have to do is you have to know and fully understand the contract that you signed with your contract provider. You need to have your legal department – I hate to say legal department but it’s a contract, so you need to make sure your legal department has a full understanding as well and is explained to the team.

I think then if you want to go down the road of moving away from a contract, you have to have your leadership team onboard meeting with each other. Somebody has got to own it, and the CEO of every community can’t be the person that owns all the products and all the changes.

Mike: Sure.

Scott: Somebody has got to own it and that person that’s got to own it has got to want to own it because if it’s just forced on somebody, that’s going to make it a challenge. Typically, with a contract company, there is a direct point of contact within a community that’s kind of the client or the client liaison, the person that the contract company “reports to.” That’s different individuals at different communities. You need to make sure that that person is the person that you want to run that department when you move over to self-op.

Now, you need to create a timeline. Depending on what your out-clause is, typically they’re 30, 60, or 90 days. Sometimes there is a clause in there that if it’s a problem that the contract company has a period of time to correct the problem. if you go to them and say, “We want to get out of the contract because your food cost is consistently 10% above budget,” depending on the contract, they might have a clause that says they have 30, 60, or 90 days to correct that problem and working with you.

You just need to understand what your out-clause it. You need to then set a timeline for that. If you have a 90-day out-clause, which is 3 months, you want to do at least 6 to 9 months above and beyond that – and I would say anything. If it’s 30 days, 6 to 9 months again on top of that.

That seems like a long time, but you think you have to build a team. Oftentimes, your managers typically always report or are employees of your contract company. That contract clearly states – and I don’t know one that hasn’t said it – they’re not allowed to stay.

Let’s say you loved your chef or you loved your dining room manager, your department manager, they would not be able to stay once you cancel the contract. That’s again one of those barriers to exit.

Mike: Yes. No compete clauses are a big thing, for sure.

Scott: Correct. But what I will tell you. If you have a contractor and your department is broken, and it can be broken in multiple ways – it could be financial, it could be staffing, HR, labor, it could be anything – it always concerns me when somebody says, “Well, I want to get rid of the contract company but I want to keep all the managers.”

Well, you have to remember you’re only as good as the people on the ground. That goes the same with the contract company. If the contract is broken, meaning they’re not operating to the agreed-upon contract, I’m not sure why most of you would want to keep that same staff that was not running it properly.

Mike: [Laughter]

Scott: Again, I’m not putting names on faces, but what I’m saying is maybe it’s time. You’re ready to move away from a contract. Maybe it’s time that you also need to rethink who’s running your department and maybe retool that.

What I often find – and this is huge – I often find that, even in self-ops, current self-ops, the managers of the dining department – the department head, the executive chef, healthcare manager, assisted living manager, whatever TO or org chart they’re using – those individuals (at least the department head) isn’t even on the management team for the community. You need to make sure you’re hiring somebody that can fit on the management team of your entire community. They’re a department head. You have a department head meeting; they should be at that meeting like the other department heads in your community.

What I often see is that the dietary team is under-hired, meaning they’re not hiring a high enough caliber individual for that position. Oftentimes, the executive chef is really probably a strong sous chef, but they’re not ready to be an executive chef. But we might have gotten them a little bit less expensive, so we might have paid less, but are you really paying less?

To me, you get what you pay for. If you pay somebody a little more and you get a more qualified individual, oftentimes that individual can save you money. So, you’re not really paying more. But it’s a struggle and I think you’ve got to start looking at how you better position your department to be part of your community, not an external part of your community with the contract company.

Mike: Yeah. No, it’s a lot to consider on top of the timeline that you laid out – six to nine months. It can be longer depending on how far down the rabbit hole you’re starting.

Scott: Absolutely.

Mike: Things to keep in mind as well like you might have to get new vendor contracts to go with it. Your supply chain can be different and it takes a while to get that stuff set up.

Scott: Well, Mike, you want new suppliers.

Mike: Right.

Scott: Because part of the problem is if purchasing was part of the challenge you had as a contract where you can’t get the product you want or the product your residents want, if you make the change to self-op and you keep all the same vendors—

Mike: What’s the point? [Laughter]

Scott: –you’re not really changing much. I’m not saying if you’re using one of the big three, broad line vendors, the Sysco, U.S. Foods, I’m not saying you necessarily have to change away from them, but you want to start using some more local, regional vendors.

Mike: Right.

Scott: Number one, the product is typically better and cheaper. Number two, a lot of the residents want to support local. That’s a thing now.

Mike: Yeah.

Scott: That’s a big thing around the country is people want to support local. They’re anti-big-business. You know let’s go and support the farm down the street. Sometimes that farm might even be a little bit more expensive, but they’re happy spending a little bit more because they’re supporting local.

Mike: Absolutely.

Scott: Then who is supporting that community year-round when they’re doing different fundraisers? Oftentimes, those local vendors.

Mike: Yeah. Yeah, no. Yeah, it’s fantastic. A place that we are working at on the East Coast right now, they have very deep ties to their community. They do a lot of partnerships and local events. I really applaud the way that they approach that.

They are in the process right now of converting to a self-op model. Of course, there are always going to be challenges and unforeseen things, but they’re taking the challenge head-on and, so far, the residents are applauding the direction that they’re taking.

Scott: That’s great.

Mike: I think that’s pretty awesome.

Scott: Sometimes you just have to rip the band-aid off. You know?

Mike: [Laughter]

Scott: Any time you make change, whether you’re going away from a contract or even sometimes if you’re going to a contractor, there’s going to be pain.

Mike: Yeah.

Scott: There’s going to be some pain, and you have to look past the pain. You think when you learn how to ride a bike. You know you’re going to fall down. You’re going to scuff your knee. It’s going to hurt and you’re going to cry. But what’s the better outcome? Once you get past that hurdle, the horizon is always brighter.

I think moving away from a contractor (if that’s right for your community) where I’ve seen it happen, it’s been very successful and individuals are better because they’re more involved with the community. The department is now again part of the community where so oftentimes when it’s contracted, everybody feels – and I say everybody: the residents, the staff, the staff in the dietary – they feel like they’re two different entities.

Mike: Yeah.

Scott: They feel like they’re coming into a country and they’re over there. “Well, they’re from there. They’re not part of us.”

They do an event like an employee appreciation. “Well, they’re not our employees.”

Mike: Right.

Scott: “They’re their employees.” That just sends a very negative moral throughout the community, and you want to tie the team. It’s all about the team today and if you don’t support “the team” (and it’s got to be one team), it’s not going to go well.

Mike: Yeah.

Scott: People are leaving jobs for $0.10 an hour, so it’s gotten to the point where it’s become a penny game. But if people love where they work, they feel valued, they feel entrusted, it’s a good thing.

You hire for desire. I always tell people in this field. You’ve got to hire people that like being around elderly human beings because that’s what the job is. It’s so rewarding to work around the senior people.

We’re all going to be there, hopefully, one day. Hopefully, we all make it to that point. You have to have that love and desire to be around seniors and making their day better every day by doing the little things.

Mike: Yeah. I love that, “Hire for desire.” I think we’re going to end up seeing that phrase pop up quite a bit there, Scott. You gave us a sound bite. [Laughter]

Well, clearly there’s a lot to consider in the sense of a contract versus not contract, self-op, all that kind of stuff. I am, of course, of the opinion that the more control that you have over your program the better off you’re going to be – provided that you have the right people to help you make that happen. If you were going to sum up, say the top three benefits for why to self-op versus have a contractor, the top three for you.

Scott: Sure. I think the top one is control. I don’t mean that in a negative way because oftentimes control is perceived as a negative. But I think control, meaning you’re controlling your destiny. It’s in your community. It should be part of your community. You should be intimately involved.

It’s not just part of your community. It’s a key driver of your community – truly a key driver. I’m biased. I think it’s right up there, like probably one or two. The industry says it’s about number three. But I think you have to take back that control.

Number two, you’ve got to understand the department. You’ve got to be engaged in the department (with or without a contractor). All operators need to be more intimately engaged with the dietary department.

Three is providing the residents with what they want and need and desire versus what someone else wants, needs, and desires. I think that’s a key driver as well. Oftentimes, the customer has forgotten that it’s the tail wagging the dog, not the dog wagging the tail.

Mike: Yeah. [Laughter] That’s an all too common thing that I think is kind of across the board right now, for sure.

What would you say are any other observations, I guess, any other thoughts that we didn’t address that you feel like we need to cover today?

Scott: You know I think that the big takeaway for me – for communities, leadership, and the C-suite in communities – is to ask yourself (if you’re currently contracted) why. Why did you contract?

It might have been two years ago. It might have been 32 years ago. Ask the question of why and ask your team because you might not know. It might have happened before you as a leader joined that group and it just is what it is. That’s the way it always has been. It doesn’t mean it’s right, so ask the question why.

Ask what true benefits are you getting out of that partnership. I don’t mean benefits that the partner, the contract partner is telling you they’re giving you. Make sure you can vet those benefits and that they’re real and they do exist.

Then I guess the last thing I would say to really dig deep on is, listen to your residents. Are your residents happy? I don’t just mean like, you know, was the meatloaf last night good.

Mike: [Laughter]

Scott: Or was the soup hot. But find out. Get the pulse of your residents. That doesn’t mean going to food committee because we all know that the food committees and resident councils sometimes are driven by a few and the voices of a few and not of the masses but get a good understanding.

As an administrator or C-suite, the way you do that is you go out and you have dinner with them. You go sit down and spend time in the café. Spend time in the dining room at mealtimes or schedule meals dining with the administrator, dining with the CEO. Get a good cross-section of the pulse of your community and whether or not they’re truly happy with your dining program.

Mike: Yeah, man. That’s absolutely great insight. Thank you very much for all of that.

Now, because you are officially in the cult, we have to ask you a couple of the same questions that we ask everybody who comes on the show.

Scott: Oh, boy!

Mike: Are you ready for this? This is a—

Scott: I’m ready… I guess. Open the door.

Mike: [Laughter] This is about as high pressure as it gets. Okay, so we refer to these, of course, as the Cynthia questions (in honor of our illustrious leader, the pilot of our mothership).

Question number one: If you could create your own dream community, retire, and live the rest of your life in this dream place, what would it consist of? What kind of amenities would it have? What would the design look like, the layout, all that good stuff? Tell us about your fantasy community.

Scott: Sure. Well, first of all, that community is going to be located on a body of saltwater: an ocean, a gulf, a bay. Ideally, the cottages or apartments would be waterfront. I could look out my window and see a dock with my boat at the end of it, so I could go enjoy fishing with friends and family.

But I think, more importantly, about the community, I think it would have to be inclusive. It would have to be welcoming, not stuffy, not stodgy. For a long time, I’d visit communities that had that stuffiness where if a new resident moved in, it was almost like, “They’re sitting over at that table. They can’t join us.”

Mike: Right.

Scott: I think you have to look. I want to go and move into a community that’s welcome, that there are no filters on. Everybody is there. It’s comfortable. It’s not stayed. It’s not uniformed. When I say uniformed, I mean there are still communities out there you have to wear a jacket into a dining room or an independent dining room.

It’s funny. I was in one not long ago. If you had a walker or an assistive device, you weren’t allowed in the independent dining room.

Mike: What?!

Scott: Oh, and that was resident-driven. That wasn’t a community policy. That was resident-driven.

I asked the question: Why would that even be in existence? I was told by a resident that most of the residents on the independent side don’t want to see what’s around the next turn, meaning they’re eventually going to go into assisted living or skilled or need an assistive device, but they’re just not ready to see that yet. I just thought that was—

Mike: Wow!

Scott: To me, that was shameful. Everybody should be welcome from age, from ability (or not ability) to do different things. So, I want it to be welcome. I want it to be relaxed, fun, and I want there to be lots of activity and lots of things to do to keep me as young as possible as long as possible.

Mike: Yeah. Yeah, that’s—[Laughter]

Scott: But being on the water is most important to me.

Mike: Oh, yeah. Well, you’re a fisherman, so you like to go out there.

Scott: Yes.

Mike: How cool would that be in your community? You walk out on your dock, plop in your pole, pull up some fish, and go cook that right there at your place. That’d be pretty amazing.

Scott: And have the chef cook it up for myself and my friends.

Mike: Yeah.

Scott: That’ll be great.

Mike: I assume you’d probably also have a couple of smokers floating around somewhere. [Laughter]

Scott: Well, yeah. There’d be some food on the smoker. Yeah, that’s a good point, Mike. They’d have to let me have a smoker on my deck or in my backyard.

Mike: [Laughter] For those of you that don’t know, Scott is quite the accomplished meat smoker. Yeah, that’s pretty awesome.

Well, you know, we could chat all day about all the awesome stuff that you’d have at your community, but let’s move on to the final chapter here. We’ve talked about a lot of things that philosophically could happen and things that we should approach, but let’s talk about on the immediate basis. What are three things a senior living operator could do right now today right this very second that would have an immediate positive impact on the lives of the residents?

Scott: Well, you know, Mike, that’s a good question. I think I answered part of this in an earlier question. At least it’s going to be a transition.

I think one is the operators need to gain a better understanding of the residents in their community.

Mike: Yeah.

Scott: And their surrounding community. Not just the immediate community but the surrounding community, and geography is where they’re pulling residents from, where new residents are moving from because they’re not always local. But they need to have a better understanding. I think, to do that, you have to come out of the C-suite, meaning you’ve got to come out of the office section of the building and spend time in the resident, living section of the building. Be present.

I was at one community where the CEO – and it wasn’t just the CEO. He started it but then it’s a concept that a lot of the large corporations are doing. They’re doing away with the CEO office and the big offices, and they’re opening up offices.

They had, in the lobby area, an area where leadership had to work – not all leadership. Obviously, there are meetings and things going on. They had to work and have an office or desk out in the open where they could be approached without barrier (no receptionist, not closed doors) to get to Mr. and Mrs. Leader of the Community.

I was pretty impressed with that because it really kind of made that “open-door policy” a true open-door policy where there was no barrier to get to that individual or individuals and have an open conversation. What I saw at this community is that a lot of the little problems never became big problems because there was an open line of communication.

I think getting to know and understand your residents and potential residents but being accessible openly to those individuals to speak to and be spoken to freely without having filters on where people are, “I’m afraid to tell the CEO we’re having a problem here.” That doesn’t happen, I think, if you do that.

Number two – and I did use this before in a previous answer – is leadership of all departments, not just the CEO but director of nursing in the skilled side or assisted side, break bread and dine with your residents. It doesn’t have to be formal. It can just be, show up at dinnertime one night and ask a group of residents if you could join them for dinner.

Eat the same food they’re eating, even if it’s in healthcare, even if it’s a modified diet. Sit down and break bread with the individuals in the different dining venues. Show them that you’re human. Show them that you care about what they see, think, and experience, and that you’re willing to make changes based on what you observe and find out.

I guess number three, listen. Really, it kind of ties into the first two, but listen. Be open-minded. Don’t be afraid to change. Again, change can hurt sometimes, but the bigger payoff can be making that change to make your community a bigger and better, and more welcoming environment.

Mike: Yeah, man. Those are fantastic suggestions. For the record, I would absolutely love to see somebody from the C-suite walk into a skilled nursing area and have a textured meal one day. Just watch the operation. See what’s happening. Take a taste of it and hang out with some people that are maybe not those that you see on a regular basis and watch how that side of the operation works as well.

I’m a huge proponent of getting out and interacting with all levels of the dining department. That goes back to restaurants too, right? You and I come from the restaurant business.

How often do you have a poor general manager who just sits in the office all day, crunches numbers, and sits behind a computer? A great general manager will go out there and touch all those tables, or a chef will get out from behind the pass bar, walk out there, and sit down and have a beer with somebody. It changes the entire dynamic.

Scott: It sure does.

Mike: It gives a human face to everything because everybody knows you’re there to manage an operation, right? That’s not a surprise. But what happens when you change that and become now a part of that community officially?

That’s across cultures and across everything. Food is one of the things that brings people together – an entire dining operation. That’s what we always say, “Come to the table. It’ll change everything.”

Scott: Absolutely. Food is the answer to a lot of problems in society. We just don’t realize it yet.

Mike: Yeah, absolutely. Well, there you have it, ladies and gentlemen, the amazing insight of our new vice president of culinary and operations, Scott Daniels. Scott, thank you so much for joining me today here on Cosmic Soup. Honored to have you as one of the now key ingredients in the formula. I appreciate you hanging out today, man.

Scott: Thank you very much. It’s been great. Come back any time.

Mike: Right on.

Well, how about that, folks? Is that what you’d call food for thought? I think so. [Laughter] I know, I know, I can feel you all face-palming right now.

Anyhoo, if you’d like more insight into contract dining or tips on self-operating, feel free to send us an email to and we’ll be sure to get back to you. So, thanks again for tuning in and we’ll talk to you soon on Cosmic Soup.

Please call us at 888-776-5135, email or schedule a quick meeting below. We are excited to work with you!

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