Unidine's Second Act

Joanna Lefebvre

BY JOANNA LEFEBVRE

Richard Schenkel may be many things—the son of a restaurateur, a diligent taskmaster, an avid fan of pepperoni pizza—but reticent he is not. And if anything gets the founder and CEO of Newton, MA based Unidine Corporation talking, it's the business of food. When Unidine opened shop in 2001 "the goal was to provide unparalleled management and culinary expertise to our clients," says Schenkel. "Our explosive growth can be attributed to upholding those two business principals."

Schenkel has some pretty good numbers to back up that claim and they are a part of the reason for Unidine recently being named to Inc. magazine's list of America's Top 500 Fastest Growing Private Companies for 2006. Rooted in its fresh food imperative, the privately held management company is on track to reach $45 million in revenue in 2006—up from $32 million in 2005. The company's success is fueled by 70 accounts—Schenkel claims there are dozens more client prospects on the horizon—in 12 states from the Northeast to the Mid-Atlantic.

"Part of our growth over the past year can be attributed to our recent entrance into what was a new market segment for our company—business dining—as well as two acquisitions which added about 16 operations to our existing client base," explains Schenkel.

"We don't want to be everything to everyone," he adds, referencing the company's focus on senior centers, hospitals and B&I. " Unidine is a focused operation on one line of business: foodservice management."

Breaking into B&I
Schenkel began his career in operations with a series of larger management companies, where he held a variety of management roles over a 20-year career. In the 90s, Schenkel became the president and CEO of Republic Management Corporation, which he later sold to Fine Host. In '98, Schenkel was recruited by Collegiate Health Care executives to help it manage a critical transition period.

In 2001, he formed Unidine to cater to what Schenkel believes is "an underserved demographic"—mid-sized senior living centers as well as community and regional hospitals.

It looked to capitalize on the potential in these niche markets, and reached $10 million in revenue by the end of 2003.

In 2005, the company made two strategic acquisitions that expanded its geographic reach and put it into a new segment—B&I foodservice management.

Healthcare Service Solutions of Columbia, MD, acquired in May 2005, was a provider of food and dining management services to senior, adolescent and rehabilitation facilities in the Maryland, Virginia and Washington D.C. markets.

Before the acquisition, Unidine had an established presence in similar segments, but its presence was limited to the New England, New York and New Jersey markets. When Schenkel saw the opportunity to acquire HSS and extend Unidine's presence, he seized it.

The other acquisition was of Delmonico Management Services, Ipswich, MA. Delmonico's eight corporate accounts, including Tufts Health Plan and the biotech firm Cell Signaling Technology, secured Unidine a meaningful entry into B&I.

Overall, the company now does 8% of its foodservice business in B&I—with 31% in hospitals and 61% in eldercare.

The expansions have given the company the opportunities to cross-pollinate in terms of its operational strategies, taking lessons learned in one segment to the others. Schenkel notes that on positive impact has been a movement to 'de-institutionalize' hospital dining operations, giving them a stronger focus, one more like in the B&I accounts. "We're also enhancing patient dining to be more of a hotel-style room service experience," adds Schenkel.

How They Wow
When he unveiled his food-focused management company, Schenkel dreamed of fresh roasted turkey, spicy meatball pizza with pepperoncini cheese and homemade chowder, a personal favorite he pronounces with a classic New England accent— "chowdah."

"We're a fresh food company," he says. "We are not a convenience company. We roast turkeys for our turkey sandwiches. We make all our own pizza dough and salad dressings. We cook to order omelets, breakfast sandwiches and burgers. We make our bakery products entirely in house. Everything we do is fresh."

"Putting our Expertise on the Table"
Right now, Unidine is celebrating the first anniversary of its dining service management partnership at Tufts Health Plan, located in Watertown, MA. Since assuming responsibility in 2005 for the fullservice cafè that serves approximately 1,200 employees, the company claims participation rates have doubled, catering revenues have increased 400% and employee satisfaction has risen by 20%.

"We are successful at Tufts because we developed and executed a customized dining and catering program targeted to the specific needs—we did not introduce a generic program," explains Schenkel.

He adds that Tufts serves as a model for what Unidine will be promote as its basic approach to landing additional B&I clients.

"Outsourcing foodservice makes good sense for our organization," says Ron Reppucci, director of real estate and support services at Tufts. "The cafè is revenue neutral and Unidine's purchasing arrangements with vendors are better than what we would be able to manage on our own."

When Tufts called on Unidine to help turn its dining program around, Unidine conducted an employee preference survey (see sidebar), so it could design an individualized program that would best meet the staff needs.

"The staff asked for fresher, more healthful options that had more visual appeal and offered a wider mix of flavor profiles," Reppucci adds.

Unidine identified these preferences and partnered with Tufts' administration. Together they rolled out a new menu and moved in new equipment.

"The cafè now offers more fresh prepared products that employees want at a price they are comfortable paying," says Reppucci.

"The most important outcome of this partnership is that Tufts' employees have taken note of the positive changes to their dining program," adds David Chechik, Unidine's director of business development for business dining.

Thinking Strategically
Unidine embraces a customized approach to the market, shunning strategies like branded concepts that are designed to be used at multiple sites. "We're not interested in a cookie-cutter approach," says Schenkel.

With 750 full-time field personnel, plus 300 employees that Unidine manages but are on its client's payroll, Unidine is structured to be field-based and hands on—an appealing approach for clients looking for an outsource provider willing to customize its service programs.

About 70% of Unidine's current business is P&L based. The other 30% is based on a management fee structure.

"Obviously in an P&L environment, the major challenge is remaining profitable without compromising service, and consistently delivering a high quality dining experience for our clients." He notes that this can bring unexpected challenges, pointing to the rise in the cost of fuel and the significant impact on the price of consumables like paper and plastic that can increase food prices.

Schenkel says he has his sight on the goal of growing Unidine into a minimum of $250 million in five years—which he hopes to achieve through a combination of further acquisitions and organic growth.

"Any future acquisitions will be synergistic to our business model," he says. "We want 'like players' with similar philosophies. We've invested a lot of time and dollars into building a strong infrastructure—one that will support that round of growth."