Looking for a way to increase your take-home pay as a quick-service restaurant owner? Reducing your utility costs may be a viable solution.
Along with increasing sales and reducing product waste, cutting back on your utility expenses can mean big profits for your restaurant.
Let's look at why these costs eat into your profits and how to increase net profit in a restaurant by reducing utility costs.
Reducing Utility Costs is One of Many Ways to Increase Profit in a Restaurant
According to DTE Energy, quick-service restaurants have become the "most energy-intensive buildings" in the country. According to DTE, these buildings use 81 kilowatt-hours of electricity and 174,000 Btu of gas each year.
What's driving this high energy use?
- Lighting
- Refrigeration
- Cooling
These three things alone make up 55% of the building's total energy use.
The average quick-service restaurant spends about $5,000-$7,000 per month on utilities. Reducing these costs can increase profits for quick-service restaurants, and in some cases, reduce them significantly. So, if you're looking for tips on how to increase the profit of a restaurant, lowering utility costs is a practical option.
Let's say that your restaurant spends $5,000 per month on electricity and natural gas. Reducing those costs by 10% would equate to an extra $6,000 in your pocket every year. It would be challenging to achieve that same level of profit increase through sales alone.
6 Tips for Reducing Restaurant Costs for Utilities
Reducing restaurant variable costs like utilities can increase profits significantly for some establishments. But where do you start? Here are some tips.
1. Be Smart About Lighting
If the goal is reducing costs in a restaurant, then it makes sense to focus on your lighting.
- In storage and equipment areas, make it a habit to turn off lights when the area is not in use. If you're having trouble getting your staff to adopt this habit, you can install occupancy sensors that will automatically shut off the lights when the room is not occupied.
- Analyze your current lighting setup. Do you have too much lighting in some areas? If so, reduce them to cut back on costs. Consider using a footcandle meter and comparing your readings to the Footcandle Light Guide to identify areas that are overlit.
Additionally, you can install automatic lighting controls, photosensors, timers, occupancy sensors, and dimmers to save on energy costs.
2. Use Programmable Thermostats
Heating and cooling costs can be significant for restaurants. Installing programmable thermostats can help cut back on these costs.
When used properly, a programmable thermostat can reduce annual energy costs by up to 10%. For many restaurants, that would equate to thousands of dollars in savings each year.
3. Turn Down Equipment After Closing
Turning down or turning off non-vital equipment after closing can also save on energy costs. Create checklists and procedures for shutting down or turning down equipment to ensure that staff is on the same page.
Encourage staff to get into the habit of turning off equipment when it's not in use. Something as simple as reducing idle fryer time could save a restaurant hundreds of dollars per year. Other practices, such as only using fan hoods when cooking or preheating ovens no more than 15 minutes before using it, can further lower your restaurant's energy costs.
4. Change Your Dishwasher Practices
High-temperature dishwashers consume a lot of energy. In addition, when left on all night, heating elements and built-in burners continue to consume energy. Turning off dishwashers at night can help reduce these costs significantly - up to $500 per year.
For even greater savings, have staff turn off the exhaust hood when it's not needed.
5. Invest in Energy Efficient Equipment
Quick-service restaurants can realize significant energy savings by simply investing in new equipment.
For example, an energy-efficient fryer can save up to $450 per year in energy costs, depending on whether it's electric or gas. Fryers that are ENERGY STAR certified typically also offer quicker cooking times, which can help boost productivity in the kitchen.
Gas ovens that are ENERGY STAR certified are also 50% more efficient than their standard or older counterparts.
Although new restaurant equipment will require an investment, in the long run, it will save you money through lower energy costs and higher productivity.
6. Use LEDs Wherever Possible
LED lighting is less energy intensive than other lighting solutions. Wherever possible, replace old lights with LEDs, such as in:
- Refrigerated cases
- Signage
- Overhead lighting
- Storage areas
- Kitchen
LEDs use about 30-40% less energy than fluorescent bulbs and up to 80% less energy than incandescent bulbs. Considering that lighting makes up a large percentage of a restaurant's energy costs, making the switch to LED bulbs whenever possible can reduce energy consumption by quite a bit.
Final Thoughts
Reducing utility costs is an effective way to increase profits for quick-service restaurants. Some tips above may require a small investment, but they will lead to savings over the long term. By reducing utility expenses alone, restaurants can add thousands of dollars to their bottom line each year.