Here are some tips to eliminate “Energy Shrinkage” to improve your margins
As an O/O, you want your restaurants to profit and run smoothly. It’s two of the most important principles of operating a franchise! But labor shortages, increasing minimum wages, rising food costs, rising energy costs…INFLATION…make this difficult. You’ve lived these headlines, and the last thing you need right now is to waste money or make things more difficult for you or your teams.
So much of what impacts your business is uncontrollable; but what if you could take control of some of the waste and chaos? Energy spend ranks in the top five expenses for most restaurants. Many owners assume energy usage is “uncontrollable” and there’s not much they can do to reduce it – or they just don’t know where to begin. The first step is to…
Change Your Mindset!
Think about wasting energy like shrinkage or even financial theft. You certainly would take action if you learned an employee was stealing from you – even a dollar a day. But what would you do if an employee didn’t set the thermostats back at closing or forgot to turn out parking lot lights after the breakfast rush? Energy-wasting behavior happens every day – costing more than a dollar a day – but often nothing is done to address it.
A great place to start is by understanding your energy bills. Unfortunately, many utility bills can be complicated and difficult to comprehend. We recently worked with a customer whose utility bill at each location contained twenty-one individual line items all contributing to their total bill! Rate plans can be multi-pronged with a mix of charges including how much you consume, distribution charges based on your location, when you consume, and what your maximum peak demand1 measures each month. The good news is resources exist that can help. Utility companies are typically good about helping you to understand how your energy consumption is affecting how much you pay, call them first! And beyond the utility companies, there are independent ‘Certified Energy Managers’ who are educated and certified by one of several standards bodies to assist you in understanding how best to reduce energy consumption and spend.
The chart below shows how a typical restaurant uses energy. The individual slices of the pie are revealing and offer some guidance about where to prioritize further actions. Below are some of the best ways to impact your energy spend based on decades of working with restaurants to reduce energy consumption and overall energy spend.
Most franchisors have created guidelines and best practices that can help too, like start-up/shut-down schedules. These not only minimize equipment runtimes but also spread the initial electrical loads created when starting equipment. This spreads your peak energy usage and can save big dollars by reducing ‘peak-demand’ charges.1
The next three slices – HVAC, lighting and refrigeration – total nearly half of a restaurant’s consumption. Here is where you have more control than you think!
Educate your employees
- Human behavior can do more to improve or worsen energy consumption than nearly anything else. It’s important to communicate with your teams continuously that saving energy is a goal of the organization. Many of the most energy wasteful outcomes are caused by misguided or inappropriate human actions. Setting specific goals and guidelines for your teams helps keep energy-saving behaviors at top-of-mind providing the best possible results.
- Be specific in your communications about how to save energy. Simple reminders to setback temps on thermostats, turn unneeded lights off, keep outside doors closed, keep walk-ins closed all contribute to better energy outcomes.
- In communications with managers, remind them wasting energy is no different than shrinkage. An AC unit left to run overnight can cost up to $20, a walk-in door propped open and forgotten for an hour can not only waste energy costing up to $10, but also puts inventory at risk and creates food safety concerns.
Much of this might seem like common sense, but it is surprising how often these basics are overlooked day-to-day in the hustle of a workday. Don’t be afraid to speak up and make it part of your culture!
Automate your buildings
Thermostats and lights:
If you’re relying on employees to adjust thermostats and turning lights on/off at the right times, you’re likely wasting money. This is a “two-strike” offense since it drives energy consumption up and wastes employee time. Whether you choose to install some simple smart thermostats and a lighting scheduler; or decide to finally invest in an energy management system to automate your building’s HVAC, refrigeration, lighting, and more, you’ll eliminate both concerns.
Walk-ins:
Most walk-in refrigeration units come from the factory with relatively “dumb” controls. They’re typically equipped with timers to trigger defrost cycles every 4-6 hours – whether needed or not. This means you’re paying to cool the space, then paying to heat it (defrost), and then paying to cool again every 4 hours! Using an intelligent refrigeration controller that defrosts based on need, not time, can save energy by reducing defrost cycles by as much as 70%. These controllers also monitor door openings and internal temperatures more accurately and share this information via a display or energy management system. And they keep tighter temperature control overall, which reduces stress on inventory and cuts back on maintenance costs for your walk-in units.
Reach-in refrigeration:
While the primary concern when it comes to reach-ins is whether the food is staying cold, the temperature reading can help you save energy too. When temps go too high or too low, energy is being wasted. Steadily maintaining a prescribed set point not only removes your food safety concerns, it also saves you money on energy too. The more temperature swings, the more energy is consumed. A simple automated temp sensing system can alert you to issues and help cut energy costs, save time, reduce food safety concerns, and reduce inventory loss.
The good news is all these measures can be easily handled by a building and energy management platform, especially those designed specifically for restaurants. These systems control some of the most energy-hungry equipment in your building. They are connected to the internet to provide your team with visibility into their operations, alarms and alerts via text or emails, and remote access and control from any web-enabled device. In addition to cutting energy consumption, they reduce maintenance costs by alerting you to issues early before they become major repairs. A good system will optimize the balance between energy consumption and comfort in your restaurants all while giving you peace of mind.
About the author:
Tracy Markie (tracy@engenuity.com) is founder and CEO of Engenuity Systems, Inc. (www.engenuity.com), a 30-year-old company specializing in energy management solutions and advice to owners of restaurants, convenience stores and other multi-location retail operations. He is a Certified Energy Manager and often speaks at corporate and industry events on the topic of energy conservation practices.
Peak Demand charges are fees levied by utilities based on the highest point of consumption by your location typically within any 15-minute window throughout the month. You’re then stuck with paying this for that month or sometimes longer.