Posted on January 13 2018
How Restaurant Chains Can Increase Profits By Improving Energy and Operational Efficiency
Restaurant chains seem to endlessly struggle to improve profit margins.
Wholesale food prices are constantly rising, yet menu prices have not risen at the same pace, thereby putting even more pressure on food-service companies. However, improvements in operational and maintenance efficiencies, as well as energy efficiency, can boost profit margins while maintaining customer satisfaction.
According to EPA statistics, “restaurants can use up to 2.5 times more energy per square foot than other commercial buildings” and “as energy costs increase, investing in energy efficiency is the best way to protect your business against these rising prices. Each year, the food service industry spends $10 billion on energy. And up to 80 percent of that energy is wasted by inefficient equipment.
energy costs account for anywhere from 3 to 8 percent of a food-service chain’s total operating expense. A 10-percent reduction in energy costs can boost net profit margins in a restaurant by 4 percent. And a 10-percent (or greater) reduction is easily achievable with energy management solutions for restaurants that monitor the chain’s locations, systems and devices.
Reducing costs with energy management
By implementing device-level monitoring of energy consumption, chains gain unmatched visibility into the devices running their restaurants and can easily identify systems that are inefficient or improperly used.
For example, managers can be alerted when lighting systems operate during off hours, if cooking equipment idles superfluously, if a fryer needs maintenance or when cooling and heating systems inadvertently work concurrently. Armed with this information, restaurant chains can immediately take action to eliminate their energy waste and reduce their expense.
Data about specific devices can also drive behavioral change. When managers present employees with specific information about which systems are wasting energy at which hours, employees are empowered to make changes to processes and behavior. Managers can also incentivize behavioral change by setting up a rewards system for employees who reduce energy consumption at their location.
Dispersed restaurant sites can be benchmarked against each other to improve efficiencies. By aggregating data from the devices at each location, it is easy to prioritize preventive actions across multiple devices and multiple sites. This can be done by benchmarking data against industry standards and similar systems or to other sites within the chain.
By monitoring energy profiles, a device-level energy management system can warn managers of impending equipment failure before it occurs. With these insights, restaurant chains can transition from resource-intensive preventative maintenance schedules to leaner predictive maintenance that is based on data and delivers service only to equipment that truly needs it. This results in reduced energy expense and reduced maintenance costs.
Increasing revenue with energy management
Device-level energy management significantly lowers costs. According to Laura Abshire, the National Restaurant Association’s director of sustainability, “With utilities representing between 3 percent and 8 percent of a restaurant’s overall costs, finding ways to conserve energy can lead to lower operating costs.”
However, the effect of energy management on the bottom line goes beyond its cost reduction. Energy efficiency promotes sustainability and enables restaurateurs to advance corporate social responsibility programs. These have been proven to develop goodwill and brand loyalty with customers.
Lower cost and higher revenue with energy management
With device-level energy management, restaurant profit margins increase without diminishing the quality of the product or the service when food service chains:
- Save on energy and maintenance line items
- Increased consumer loyalty
Device-level energy management at restaurants does not have to be an expensive undertaking. It can be quick, easy and affordable to implement, and can offer long-term returns and increased profits.