Profits or Pushback: Opening Senior Living Restaurants to the Public

Senior living providers looking to make their dining venues viable revenue streams are finding themselves walking a tightrope between fostering intergenerational mingling and residents who prefer their restaurants remain an exclusive amenity.

The growing pains behind this trend were discussed at Senior Housing News’ DISHED event in Chicago last month.

All told, opening dining venues to the general public can pay off, but the move tends to work best in particular types of communities and must always been executed with care and caution.

Most residents prefer exclusivity

Providers are recognizing the untapped potential of dining operations to foster connections outside of their communities — but they are finding pushback from residents, AG Architecture Senior Associate Eric Harrmann said. Wauwatosa, Wisconsin-based AG Architecture is doing a survey on common senior living amenities. One of the questions is whether residents prefer an open market approach to dining, or exclusivity.

“Right now, 75% want exclusivity, but with local restaurateurs serving them,” he said.

Seniors in private-pay communities are largely unwilling to open up their dining services to the outside because they believe the high buy-ins and rents they pay to live in a private campus afford them amenities available only to them — and that extends to dining, Masonic Communities Kentucky Vice President of Independent Living Casey Adams said.

The demand for exclusivity extends deep within Masonic’s campuses. The company’s 82-acre Louisville campus is home to a full continuum of care — each with its own independent restaurant. The campus also hosts an affordable living component, which does not have access to the life care community dining venues.

“They’re paying for a country club experience,” Adams said.

Mixed-use makes for an easier entry

Providers operating more successful public restaurants tend to be found as part of a mixed-use, intergenerational development.

AG Architecture, spurred by the responses to its amenities survey, is master-planning a fully inclusive senior living community in Madison, Wisconsin, working around intergenerational and multipurpose uses, Harrmann said.

AG is working with a nonprofit senior living developer, a multifamily developer and an investor in age-restricted communities on the project. One of the development’s linchpins is developing a commons around the site’s main street. Harrmann believes this can be used to bring the public to the community and create a vibrant senior housing aspect. The commons would serve as a destination the independent living residents have easy access to, but is not their front door.

“That’s crucial to this development because it requires them to travel to this amenity,” Harrmann said.

Mixed-use is the foundation for LivGenerations’ Ahwautukee, an independent living, assisted living and memory care community in Phoenix, Arizona. The community is part of a larger mixed-use concept where multifamily is the foundational component, Thoma-Holec Design Principal LuAnn Thoma-Holec said.

LIV Generations Ahwatukee has five dining venues, ranging from white tablecloth fine dining to a cafe called Tuk, which is open to the public yet still provides ample privacy for seniors. Tuk is connected to the senior living community via a mezzanine, and residents may enter via elevators on the first two floors. Outside patrons, however, cannot enter the community without a key fob.

LIV Generations was determined to make the cafe a marketing tool for future residents, Thoma-Holec said.

Another Ahwatukee dining venue that is open to the public is the Silk Tassel Tea Room. This has become a destination for residents and outsiders alike. Both the tea room and Tuk have liquor licenses, another attraction for outside visitors, LIVGenerations Vice President of Dining Services Cara Baldwin said.

“In Arizona, you must be open to the public if you’re applying for a liquor license,” she said.

The cafe and tea room have proven popular with residents and visitors since opening. Baldwin estimates 80% of Tuk’s sales are influenced by the adult children of parents having a positive experience there.

“We maybe lost two customers since we opened,” she said.

Twenty-five percent of Ahwatukee’s residents frequent Tuk monthly, Baldwin added. The rest are content to patronize Crave, the community dining room. It has an open kitchen which has become the experiential center for residents, their family and friends, according to Thoma-Holec Design’s post-lease up evaluations.

Get the planning right

Providers find themselves working to overcome objections from board members and other financial decision makers when adding a public dining component to a community, Adams said. Opening a cafe or bistro has an impact on balance sheets. If a cafe produces more sales, it usually results in more staffing to handle the volume.

“Maybe your spreads grow, but not always for the good,” he said.

Photo credit: James Kruml (Robotoaster)

Sometimes a provider can overstaff a cafe, as LivGenerations did when it first opened Tuk, Baldwin said.

“When we opened Tuk, because of the location and connection to senior housing, we didn’t get the push of being a new restaurant,” she said. “But we budgeted and staffed for it. We wound up being overstaffed.”

Masonic Communities Kentucky has a bistro on its campus it is looking to open to the public, Adams said. The bistro operates at a loss annually, but it serves as the main social hub for the community and could realize greater income potential if it became a public amenity.

“Right now, I’ll take the loss,” he said.

Masonic also opened a bakery last year with a locally renowned baker. The company is exploring if this is another potential source of revenue and may have it rezoned for commercial use, if the value proposition is solid.

Another challenge is finding the best value proposition for residents and visitors. Ahwatukee residents may use the dining dollars included in their residency packages to buy food. To ensure those dollars are being spent, Tuk stocks a variety of pre-packaged foods, Baldwin said.

Tipping has emerged as yet another issue, one that has service industry workers second guessing a move to senior living. Tuk staff receive tips from residents and visitors alike, but do not participate in employee holiday appreciation which can include yearly bonuses because they could be earning more income if they did. This can result in lower morale within the overall workforce.

Baldwin found a solution to the situation. LivGenerations instituted a new policy for cafe employees. They earn a $13 hourly base salary, and pool their tips. Also, with regular customer traffic patterns established, Baldwin is able to staff Tuk based on the community’s current income. Staff costs have decreased since these changes went into effect

“Any retail plan needs to be budgeted as a retail store,” Baldwin said.