Richard Schenkel has left his mark as a self-proclaimed industry disrupter and insurgent. His latest venture, Phoenix3 Holdings, is focused on elevating the lifestyle and distributive services in the senior living, healthcare, and corporate sectors.
He has once again doubled down on his experience building companies and expertise by betting on his strategic leadership at Phoenix3.
His business philosophy is grounded in taking calculated risks – aligning companies around strong values on growth-oriented missions to achieve success and build shareholder value.
As the Founder and CEO of Unidine Corporation in 2001, the industry took notice as he rocked the boat within the senior living, behavioral health, corporate, and healthcare verticals.
Unidine Corporation is a market leader and the first company of its kind to provide strategic dining management services that offer chef-driven programs with strict quality standards and a strong emphasis on culture.
Under Richard’s leadership, Unidine became a $800M+ managed volume company with over 7,000 team members. In the span of 20 years, Unidine grew from $0 to $700M+ in sales revenue.
In 2017, Compass Group USA partnered to acquire Unidine, bringing it under its umbrella as a world leader in food service management. Richard led Unidine through the full life cycle of business development from privately funded, to private equity, to capital group.
In 2021, he created Compass Community Living, the largest senior living and support service company both in the USA and globally. Richard served as the CEO of Compass Community Living, the parent entity of three unique brands: Morrison Living, Coreworks, and Unidine.
Under Richard’s discerning leadership, Compass Community Living’s 15K+ employees have provided hospitality and service excellence to more than 1,400+ retirement communities, behavioral health facilities and acute care hospitals across the USA, delivering $1.3B in revenue.
Richard strongly believes that “culture will always shape an organization.” His business philosophy is grounded in aligning companies around strong values on growth-oriented missions to achieve success and build shareholder value, taking calculated risks.
“The key to a successful business is creating a team that feels like family. Our performance is truly enhanced when we are engaged on both personal and professional levels. Culture is imperative for helping define how organizations coalesce, incite growth, and increase profitability.”
Could you please provide a brief overview of your background for those who may not be familiar with you? Specifically, could you discuss the factors that led you from Newark to Madison, and elaborate on this journey for a moment?
Certainly. I had the privilege of growing up assisting my father at his luncheonette in Newark, New Jersey from a young age. This experience exposed me to the hospitality industry and instilled in me a strong work ethic.
Transitioning from this role, I began working at Daughters of Israel, a long-term care facility in West Orange, New Jersey, under the guidance of the food service director.
Despite my initial lack of knowledge in the industry, I dedicated myself to learning and eventually excelled in this environment.
Working at this facility during summers and after school provided me with valuable insights into food service management within a senior living setting, particularly in a skilled nursing facility.
I am curious to know if your grandparents were alive during that time. It is evident that you possess an understanding of the challenges faced by the population, considering their advanced age.
During the past, the demographic composition was notably diverse – particularly in skilled nursing where individuals possessed a certain level of acuity yet retained mobility.
In contrast, present-day skilled nursing facilities exhibit a higher acuity level, often resulting in a lack of discharge from such establishments.
Following my stint at the University of Wisconsin-Madison where I pursued a degree in food service administration, I delved into food service management.
An internship at Bronson Methodist Hospital in Kalamazoo, Michigan’s dietary department provided me with valuable experience in a more formal setting, where we were referred to as Dietary Dietitians.
I transitioned to employment with Aramark for a brief period before joining Marriott Corporation, where I enjoyed a lengthy tenure.
Notably, my involvement with Marriott predates the establishment of certain entities within the organization, with Bill Marriott himself attending my orientation, underscoring the company’s small-scale operations at the time.
This transition marked a significant shift in culture and operational dynamics.
Marriott is widely regarded as an iconic company within the hospitality industry. Could you please share some of the key lessons that you gained from your experience with Marriott?
There are popular sayings that highlight the importance of taking care of employees to ensure that they in turn take care of the guests. The organizational structure at that time was notably different.
It is worth noting that the company’s worth was estimated to be between 300 to 400 million. During that period, a significant portion of my career was dedicated to this company.
Subsequently, I engaged in several small business startups within various industries – independently or in partnership with others – always appreciating the entrepreneurial spirit.
Transitioning from Marriott, I relocated to the Boston area where I joined Dayca International. Regrettably, this experience did not align with my expectations, so I made the decision to transition to another food service management company, where I played a key role in its expansion and even facilitated an acquisition with another organization.
Transitioning from a large corporate environment to an entrepreneurial venture can be a challenging endeavor for individuals. Can you elaborate on how and why you were able to successfully make this transition?
Prior to Unidine, I was involved with Republic Management Corporation. Subsequently, I ventured into the technology sector with a startup called SingleCenter.com, an online dating platform aimed at rivaling Match.com.
However, due to the economic downturn in 1999 and 2000, many businesses, including Google, faced challenges. In retrospect, I realized the importance of focusing on my expertise in food and dining, leading me to establish Unidine in 2000.
I believe that my experience working for a large company allowed me to effectively absorb a lot of knowledge. However, I have always possessed a self-directed mindset, which I believe is essential for entrepreneurship.
Being able to motivate oneself without external influence is crucial in this field. My background has also equipped me with the skills to develop systems similar to those found in larger corporations within a startup setting – ensuring a structured approach rather than a chaotic one.
Furthermore, I have learned the value of financial prudence in a startup environment, where every dollar must be accounted for.
I agree with your observation that individuals transitioning from larger organizations to startups may struggle due to the differences in work culture and expectations.
At my company, Unidine, we have encountered this when recruiting individuals from major corporations, whom I refer to as the “Big Three.” When we launched in 2001, it was Aramark, Compass Group that had Morrison Living, and Sodexo.
Those were the three that we’d bump into. We took a very different philosophical approach back then to be the whole foods and food service management.
Fresh food, no convenience, culinary driven. One thing led to another and we started to gain some traction in the market in the first five years.
Entrepreneurs dream and a lot of them fail because the dreams are too big to be sustainable in practice. Fortunately, at Unidine, we raised capital in year seven and went on a tear to become very, very successful.
I funded it totally the first five or six years. We started with three people, and we built out the infrastructure. In any startup, the whole issue is about selling new clients. We were very successful initially in the Northeast and Mid-Atlantic.
Then we moved into the Midwest and Southeast. By the time I had resigned, I think we were in 38 states. We built the business with a core of senior living, health care, and corporate dining.
Could you please clarify how much of the contract securing process is dependent on a financial commitment to build out a kitchen facility as opposed to the culinary culture and menu offerings? This has been a point of curiosity for me.
During the period when a company is privately held, there is typically a focus on viewing a dollar as a dollar and making conservative investments, as opposed to larger corporations.
This mindset remains prevalent today, as individuals continue to prioritize excellent service and a positive organizational culture over seeking capital.
Industries such as colleges, universities, senior living, healthcare, and corporate dining are heavily reliant on capital expenditures. However, in my view, the process of securing agreements in these sectors has become excessively complicated.
Is the need for a publicly traded company to acquire growth through purchases rather than organic growth a contributing factor to this phenomenon? What factors drive this trend?
It is believed that a public company must have a specific growth target, with the common perception being that investing in capital expenditure (CapEx) is the way to achieve this growth.
For instance, if a company is worth 20 billion, aiming for an 8% growth rate would equate to 1.6 billion in annual growth. Despite the appeal of CapEx to attract national clients, this was not the primary focus of our organization.
Instead, we sought out individual clients who were interested in unique offerings, which ultimately led to our success and subsequent growth of the organization.
I just realized we overlooked a point you made regarding the significance of individuals. Could you elaborate on how you developed this aspect? Although I dislike using the term “culture,” it accurately describes the concept. How did you establish an environment in which employees were motivated to come to work every day?
The foundation of a strong organizational culture begins on day one. Clearly defining the mission, vision, and values and living by them daily is essential.
This goes beyond simply printing them on cards for employees to glance at when convenient. Instead, it should be deeply ingrained within the organization.
Daily lineups, akin to the Pledge of Allegiance in schools, should be conducted without fail to reinforce this culture.
Culture is a key aspect of an organization, reflecting its competitiveness and holding individuals accountable for living up to its values. At Unidine, this was enforced rigorously, with a designated Director of Culture overseeing its implementation throughout the company.
The strength of this culture was evident when employees who left Unidine for other opportunities would reach out to express how unique and familial the culture was in comparison.
It is often only upon leaving an organization that individuals truly appreciate the culture they were once a part of. This underscores the importance of consistently nurturing and upholding a positive organizational culture.
It can be argued that technological advancements have led to a divergence from fundamental principles that were once foundational in organizational development.
To a certain extent, I believe there has been an impact. However, it is evident that within the industry, there will be new entrants who must identify a unique market segment beyond technology.
Personally, I have not been particularly impressed with the technological advancements in the realm of food and dining management services.
At Unidine, we prioritized maintaining the integrity of our brand, unlike other companies that may compromise their brand identity in pursuit of profit. Our refusal to compromise on quality was a key factor in our success.
In contrast, larger corporations may prioritize business growth at the expense of brand integrity. This highlights the distinction between a privately owned organization with a clear focus on values and a larger corporation solely driven by expansion.
One of the current challenges facing our society is the increasing cost of the labor force and the diminishing workforce. In light of this issue and its impact on the industry, how can we effectively navigate towards implementing a $20 minimum wage?
It appears that many have overlooked the significance of wages as the sole motivator for individuals in the industry. There exist numerous alternative methods to inspire and attract individuals to this field, yet none have been effectively implemented.
Often, organizations solely focus on compensation, such as a $20 hourly wage with healthcare benefits and a 401K. However, many individuals are forced to take on multiple jobs even at this wage level.
For the average person, working 40 hours a week at $20 per hour amounts to $800. When multiplied by 52 weeks, the yearly income is $41,600, which is below a livable wage.
Therefore, organizations must be willing to explore innovative strategies to redefine the roles of their employees in order to enhance retention rates.
While I may not have all the solutions, at our investment company, we prioritize ownership stakes as a significant incentive.
Unfortunately, larger corporations with 275,000 employees often overlook this approach and are hesitant to offer ownership opportunities to their workforce. This shortsightedness is likely to result in high turnover rates and ultimately lead to failure for these organizations.
Could you please clarify the meaning of ownership in the context of ESOP and equity interest?
It is important to consider various ownership models such as ESOP, Profit interest, and phantom stock within the realm of food service management.
However, there has yet to be an ownership model that encompasses all employees within a company. The introduction of such a model would position a company as a trailblazer in the industry, setting them apart from larger competitors who may struggle to implement such a system due to their size and structure.
This represents a misconception within the industry, as there are individuals who seek opportunities for creativity and innovation within their roles.
By offering ownership to all employees, companies can attract top talent and potentially revolutionize the industry. For emerging companies, this approach may lead to significant success and establish them as leaders within the food service management sector.
It is commonly understood that the time period between 5 p.m. and midnight is when individuals prioritize their personal lives, including spending time with family, among other activities. This aspect of life is not readily accommodated in the restaurant industry.
Certainly not. Recently, I was engrossed in watching a television show called “The Bear” which revolves around a chef who establishes a restaurant in Chicago.
The dynamics portrayed in the show are truly captivating, and led me to contemplate the parallels between running an organization and the workings of the restaurant industry – particularly in a kitchen environment where precision and teamwork are paramount above all else.
Comparing this to the quality of life in food service management, there appears to be a discrepancy. It seems that the potential to attract talented individuals exists, provided they are afforded the opportunity for creative expression
Often, individuals in these roles are constrained by excessive structure, hindering their ability to innovate. It is essential to strike a balance between providing a framework and fostering creativity in order to cultivate a successful team.
Does creativity allow for the selection of my own menu, choice of vendors, and shopping locally? What implications does this hold?
It is recommended to establish guidelines for certain aspects of the operation, while also allowing individuals a greater degree of creative freedom.
In the search for a talented executive chef, it may be counterproductive to strictly dictate recipes and menus. Top-tier restaurants often seek chefs who can showcase their creativity, and imposing rigid constraints may limit the ability to attract such individuals.
Furthermore, in response to that, there is a RATIONAL combination oven that can be implemented. With this oven, we have the capability to pre-program all of our menus in advance, alleviating any concerns or worries.
This provides a significant advantage in streamlining our operations.
During my tenure as CEO, I have always prioritized consistency and quality in our products. When selecting culinarians for our team, we sought out creative and dynamic individuals who were committed to pushing the boundaries of culinary innovation.
One particular chief culinarian even proposed to have the entire organization produce its own ketchup. While I appreciate the spirit of experimentation, I believe that this idea may have pushed the boundaries too far. As a consumer myself, I can discern the difference between various brands of ketchup, and I continue to prefer Heinz ketchup.
When seeking talent, did you prioritize the CIA and Johnson and Wales as the initial or final destinations?
As our organization expanded, we integrated talent acquisition into our processes more extensively. We always sought individuals who were genuinely interested in joining our team.
As the company grew from its inception to reaching hundreds of millions in revenue, we observed a shift in the type of talent required. The journey from zero to 400 million was particularly enjoyable.
Upon surpassing the 500-million mark, profitability became more achievable, yet there was a risk of losing touch with both clients and team members.
I personally conducted interviews for every candidate joining Phoenix3, focusing not only on technical skills but on cultural fit. In my view, aligning values and DNA with new hires is akin to building a family within the organization.
While I humorously reflect on wishing I could have interviewed my children’s significant others, this sentiment underscores the importance of CEO involvement in key hiring decisions beyond direct reports.
Such involvement contributes to the organizational culture and its values being upheld throughout the company.
I am also interested in hearing about your work ethic. In the scenario where you have an associate who lacks a strong work ethic, how would you handle the situation?
It is believed that work ethic cannot be taught, and this belief has become a fundamental principle within our organization.
What was the rationale behind maintaining their distinctiveness rather than integrating them for synergy?
My philosophy was centered on the idea of operating two separate brands under one overarching entity, similar to managing multiple restaurant associates.
This approach allowed for autonomy while still falling under the same umbrella. This concept was applied to senior living with the establishment of Compass Community Living. As the CEO of a rapidly growing company, I found enjoyment in building and leading organizations.
However, I made the decision to resign in 2022 because I believe in the importance of having fun in what I do each day. When work becomes just a job, devoid of enjoyment, it loses its appeal.
Upon announcing my resignation, some expressed concern that I was retiring. I clarified that I was resigning to pursue new opportunities and continue to have fun in my work.
I believe that life is too short to not enjoy what you do, regardless of age. Retirement may bring joy to some, but personally, I find fulfillment in staying active and engaged.
Each individual’s perspective on retirement is unique, reflecting the diversity of people and their values.
Can you please elaborate on the origins of Phoenix3 and provide some insight into its development process?
Indeed. Phoenix3 has undergone a significant evolution. Upon departing my previous position, I was uncertain about my next steps. Recognizing the availability of capital in the private equity landscape, I observed a gap in industry knowledge among investors.
This led me to conceptualize a model that combines elements of private equity with specialized industry expertise. The idea was to support portfolio companies by providing relevant subject matter experts to facilitate their growth.
It is evident that many entrepreneurs face challenges as they strive to scale their businesses from zero to $100 million. Lack of industry expertise can often be a limiting factor in their success.
My personal experience of leading a $1.5 billion organization with 17,000 employees from its inception attests to the importance of expertise and discipline in achieving substantial growth.
In entrepreneurial ventures, the need for evolving talent is crucial. Individuals who may have been instrumental in the initial stages of a company’s growth may find themselves outpaced as the business expands.
This necessitates making difficult decisions to ensure continued success.
Phoenix3 was founded on the principles of combining capital investment with industry expertise. Our initial investment in Infuse Hospitality, a management service company specializing in on-site management of multi-tenant buildings and restaurants, has yielded positive results.
On-site management of multi-tenant buildings involves the process of overseeing the operations and maintenance of a property with multiple tenants. Upon entering the building, one is expected to adhere to certain protocols and procedures.
The company, which began in Chicago, is part of our portfolio. Co-founded by Michael Schultz and Michael Klong, we believed that with proper funding and strategic management, they could progress to the next stage of growth.
Currently, the company is performing admirably. Additionally, we have made smaller investments in ventures such as a family meals app designed for catering services in restaurants.
While this investment may fall slightly outside our usual focus, the company is currently seeking funding in a venture capital round and is led by a commendable CEO.
Could you please clarify if the space designated for easy catering is the one being referred to?
Indeed, I completely agree. However, I believe we should adopt a more flexible and disciplined approach in this regard. Currently, we are assessing several other management service companies and will invest in those where we possess the requisite technical expertise.
It is imperative to maintain discipline in this regard and refrain from venturing into unfamiliar industries. Our primary focus lies in distributed services and lifestyle service companies catering to corporate, senior living, or healthcare sectors.
One of the questions I would like to pose is regarding the potential return to work, specifically in relation to Infuse. Do you foresee a resurgence of individuals returning to office environments? What are your predictions for the future of workplace populations?
The frequency of traffic congestion varies based on geographical location. In my experience, certain days in New York City, such as Tuesday through Thursday, tend to have heavier traffic compared to Monday and Friday.
However, even in cities like Boston where fewer people are commuting to the office on those days, there is still an observable increase in traffic.
It is evident that the traffic patterns have changed in recent times, but it is not as predictable as it used to be. I am curious to know your thoughts on this matter.
From personal experience, I have observed a stark difference in the real estate landscape between Boston and Miami Beach, where office spaces are scarce and come at a premium.
Meanwhile, in cities like Chicago – where Infuse is headquartered have yet to fully recover from the economic downturn – there remains a distinct niche for companies like Infuse to assist property owners in these areas.
The emphasis on amenities as a strategy to attract occupants to these buildings is evident, with various companies exploring innovative approaches.
What’s your read on the status of the healthcare marketplace?
You have a skilled nursing market that is a relatively low-cost operating business. Let’s call it what it is: It’s Medicaid, Medicare for the majority of the population.
As much as you want to provide great dining service there, the feds do not give you a dollar more, a dollar less to accomplish that.
Sounds an awful lot like the correctional feeding model.
Right, very much the same. It’s the same three players dominating the healthcare market. When you get into this independent living and assisted living model, I think as the population ages out, it’s got to change.
You can’t put people in a dining room three meals a day, seven days a week. We’re going to give you a menu and we’re going to have floral carpet in the dining room. I’m not saying they’re all like that. I think it’s got to get shaken up.
I equate it to the way colleges and universities work. Do you remember meal plans? You’d go to college and there was a 12, a 14, or a 21 meal plan and there wasn’t a la carte.
Then they came in with debit cards and then they became a P&L where you had to attract students to the dining service by having great food and service – they’d even let outsiders come in if it was great.
I think the UMass is one that has done a wonderful job. Right, wrong, or different? Self-operated. With senior living, everybody’s trying, but there’s too much focus on offering flexibility to clients and you get the sense that everybody tries to be everything to everybody.
A former senior chef, now working at a country club, told us that he resigned from his position at a prestigious senior living facility in Westchester due to the residents’ preference for simpler fare such as hot dogs and macaroni and cheese over the items listed on the menu. The residents sought comfort food options instead.
Yes, they do. Occasionally, we may go to extremes, but we are still able to produce excellent comfort food. Furthermore, it is important to always have a reliable selection of comfort menu items available.
In my opinion, the market is evolving as the individuals entering independent living facilities nowadays are knowledgeable and adaptable.
It is a mistake to think that this issue is just about food. The current state of the market suggests a need for change, particularly in the integration of technology within senior living facilities.
It is evident that residents possess smartphones but lack a seamless way to interact with the services provided. This fragmented approach, where clients dictate the terms, must evolve to meet the changing demands of the market.
As a senior living operator, it is essential to consider the role of service in attracting and retaining staff. The prevailing expectation of securing high-quality staff without appropriate compensation is unrealistic.
A reevaluation of the current model is necessary to ensure that employees are adequately rewarded for their efforts without the reliance on gratuities.
The comparison to the country club market highlights similar challenges faced in terms of service quality and compensation.
By reevaluating the current practices and adopting a more sustainable approach to rewarding staff based on performance, senior living facilities can enhance their overall appeal and quality of service.
All photos courtesy of Phoenix3 Holdings, LLC
