How to Assess Restaurant Energy ROI

Are energy costs at your restaurant hurting your profits? Restaurants run on slim margins, and the costs of powering freezers or keeping the lights on can be debilitating. You may be wondering if it’s worth the upfront investment to introduce smarter energy updates to your business.

Fortunately, some upgrades can be worthwhile, but it’s important to stay on top of measuring their impact. Read on to learn how to assess your restaurant's energy return on investment (ROI) so you can make the most informed choices.

Invest in Energy-Efficient Upgrades

You don’t have a lot of cushion when you’re operating a restaurant. And every effort to shave dollars off your expenses can help. 

When you decide to add energy-efficient appliances, lighting, and other improvements to your kitchen and dining space, you’ll see the savings. Monthly utility bills will go down, and you won’t be reaching out for maintenance help as often. Newer appliances will be more reliable.

Additionally, you can become a more sustainable business operation, which customers will appreciate. You might even see improved kitchen operations when you’re able to work with better equipment. In short, upgrades can help your bottom line. 

Determine Where You’re Starting

If you want the most accurate picture of how much money you’re saving with energy-efficient upgrades, you’ll need some data. You don’t need to be an accountant to collect financial details and make comparisons. With a year’s worth of data before making changes, you’ll be able to measure improvements more easily. 

Gather all utility bills and maintenance bills. If you had a refrigerator coil break or lost food due to a malfunctioning fridge, those are all details to collect. 

You may notice some seasonal changes, too, in your costs. If you’re serving more meals in the summer, for instance, that can force your fridge to work harder. Likewise, you may have higher energy costs if you’re constantly running the AC. 

Choose the Right Upgrades

You may not have the budget to do a complete overhaul of outdated equipment. But even one or two changes can translate to energy savings. Look at your existing equipment to determine where you can make the biggest impact. 

For example, maybe you have an aging HVAC system. The extra energy required to maintain stable temperatures and added maintenance could be cutting into your profits. Or perhaps you could see savings if you upgraded all lights to LED options. 

Look at your cooking equipment, like flatops, ranges, and ovens. And consider your warming equipment or fridges and coolers. Upgrading to better commercial food holding and heating equipment can help cut down on food waste and lower utility bills. 

Consider Potential Energy Savings

To make better upgrade decisions, you can estimate your energy savings for different appliances or systems. There might be Energy Star data on a given appliance, for example, or vendors could supply you with estimated savings. You could even ask other restaurants to understand how their upgrades helped.

At the same time, know that you may be eligible for rebates from your local utility company if you switch to energy-efficient equipment. It’s always smart to see if you can get rebates for the equipment itself, or even the installation costs.

If you get a rebate for $1,000 on the installation of a $5,000 piece of equipment, for instance, that could lower your overall cost to $4,000. Keep rebates in mind when you’re trying to calculate the most precise ROI.

Don’t Overlook Maintenance

Did you have an old freezer that constantly had maintenance issues? With newer equipment, maintenance costs should go down. 

You won’t need to make emergency calls after hours. And your equipment should have a better lifespan when it’s new.

Tally up your annual repair costs for old equipment, and compare them to what you experience with new equipment. Subtract the second number from the first, and you should see significant savings. Remember that lower maintenance costs can contribute to a better ROI.

Look at Special Considerations

If you own multiple restaurants or are hoping to expand, it’s important to ask additional questions before upgrading anything. After all, you’ll want to have a smooth transition across all spaces.

Ask yourself whether new energy-efficient equipment meshes with existing workflows. Will the new freezer fit in all spaces? And will staff need additional training to use the new cooking equipment properly? 

Ask what warranties cover. And be sure that parts are readily available if something goes wrong. You can’t afford to be without a functioning espresso or ice machine. 

Be confident that any new equipment can work across locations. And ask about discounts for buying multiple products from the same vendor. 

Make the Right Assessments

Knowing how to assess your restaurant energy ROI might feel daunting. But when you commit to a few smart upgrades and measure the changes, you’ll see that the investment is worth it. You can see big savings when you consider rebates, utility and maintenance cost improvements, and warranties. 

With a targeted approach, you can improve your energy efficiency, sustainability, and business operations.