Calveta was a firm that managed food service operations for senior living facilities (SLFs) in the US. It was built on the passion for food and traditional families value of Antonio Calvelta, who was known as founder and former CEO of Cavelta Inc.
Antonio had begun his restaurant in 1966 and entered the senior market in 1972. He made better food that was also more nutritious for residents in SLFs but not exceed their food budgets. In 2007, Antonio named his eldest son Frank (CFO) as the new CEO of company and told him to double the company’s revenues within 5 years. By June 2009, Calveta Dining Services (CDS) ran food services for 976 SLFs and employed 15,000 people. Despite the firm’s rapid growth, Frank couldn’t find a credible strategy to keep the company’s culture and reputation and grow the business as aggressively as his father wants.
According to the Centers for Medicare and Medicaid Services, there were roughly 18,000 nursing homes in the US in 2008. 66% of the facilities were operated for profit, the rest as non-profit and government owned. Of these facilities, 55% were run by large chains. In 2008, Calveta’s $2 billion in annual revenues represented 10% of the total market, making it the 4th largest company in the market. Calveta’s growth outpaced the industry average, growing revenues by 52% in the past three years. However, Calveta’s total revenues were dwarfed by global dining service competitors Culinair, Robertson, and Pinehurst, all of which operated internationally and had diversified into the hospital, education, sports, and business & industry sectors.
Calveta’s five basic goals, often referred to as the backbone of “Antonio’s Way”: 1. To provide highest quality food and personalized service to the residents of the SLFs we serve. 2. To hew to the budgets of our SLF clients and our own company. 3. To innovate constantly, developing new service features as determinedly as new menu item. 4. To develop every Calvelta employee to his or her full potential. 5. To grow profitably, generating the funds needed to generate even greater growth in future years.
Goal 1, 2, 3
Calveta prided themselves on their food quality and customized service. Unlike other companies, Calveta used fresh ingredients instead of canned ones to bring out the bold flavors that older people enjoyed and built its local food service teams and menu offerings to serve each facility uniquely.
Calvelta also distinguished itself from competitors through its cost-control model, e.g. portion control, waste control, residues recycling and low prices by signing long-term contracts with the best vendors.
The principle of continuous innovations was also highly emphasized. The “At Your Service” system was the result of realizing this principle. It was a catering program that allowed residents to pre-order their meals for the next day, which was devised in an effort to provide more personalized service to bedridden residents.
Goal 4
Calveta Dining Services supported promotion from within, frequently from the front-line employees who’d worked at SLFs. Along with its long tenure of senior executives and highly competitive total manager compensation and benefits, Calveta distinguished itself by emphasizing other aspects of employee motivation and development: wide-ranging training programs, constant feedback, and frequent recognition. The company also offered a range of educational programs, from basic literacy to advanced culinary courses and many knowledge sharing events.
Calveta’s commitment to developing every employee led to the creation of an aggressive management-progression structure. A traditional career path might take a committed employee from entry-level food staff to coordinator, then to supervisor and ultimately to manager. Moreover, employees rotated from one account to another, as Calveta regarded positions with larger accounts as more prestigious and regarded a transfer to one of those accounts as a promotion.
The staff who felt valued and taken care of eventually became loyal to the company, hence the high staff retention rates (nearly 40% higher than industry average).
Goal 5
The SLF market seemed to have great growth potential. Due to the aging of the Baby Boomer segment, the number of elderly would climb from 39 million in 2009 (12.8% of the US population) to 72 million (20% of the US population), which would result in a considerably increase of the number of elderly living in SLFs. Moreover, just 25% of SLFs contracted for food service, meaning that 75% remained potential customers. But, to achieve the goal of doubling its revenues in five years, Calveta needed to branch out beyond the SLF segment.
Unfortunately, as Calveta remained focused solely on SLFs, many long-term food service contracts with hospital operators had fallen into the hands of several wealthy competitors. In addition, the fear of Calveta’s solid reputation as a leader in the health-care sector being threatened as its relative size shrank versus the competitors and the aftermath of the 2008-2009 recession which might result in hospital closings kept it from venturing into the hospital segment.
Even so, the results of exploring other market opportunities were discouraging. By 2009, the hospital segment seemed to offer the best opportunity. But, as Calveta had been able to fuel its growth through prudent cash flow management, it shouldered little debt. If Calveta chose to pursue growth through acquisition, its no-debt policy would certainly need to be set aside. Moreover, with Calveta’s unique culture, difficulty in adopting “Antonio’s Way” also served as an obstacle to growth through acquisition.
Calveta divided its operations into 12 regions, each managed by a Regional Vice President who reported into Calveta's corporate executive team. Each Regional Vice President supervised a Director of Operations and up to six Area Managers. Area Managers handled both operations and sales in their geographic areas, including obtaining contract renewals for existing accounts. They also participated in sales proposals and presentations as experts in Operations. Reporting to each Area Manager were Account Managers and Directors. Each Account Manager or Director managed a single SLF account. Managers were assigned to small accounts, Directors to larger accounts. Each region also employed a Regional Chef and up to eight sales representatives who pursued new business.