Energy costs are rising fast to the top of the target list for restaurants and pubs as ever rising prices squeeze profit margins.
It’s been a tough few recession years for the hospitality sector but things are looking a little better now while at the same, the sector is acutely aware of the fine line between profit and loss.
It was significant, then that groups in the restaurant and pub sectors collaborated and announced a benchmark on energy efficiency and to discuss the effects on profits and environmental impact.
As a Big Hospitality report advised, restaurant and bar groups involved in the assessment represent 80 per cent of managed outlets in the UK, including Whitbread, Pizza Express and J D Wetherspoon.
The benchmark reinforces our findings from hospitality clients, showing energy to be the second highest controllable cost factor after wage costs. More important, the benchmark suggests that energy consumption will soon be the biggest target, ahead of labour costs, as companies seek to maximise efficiencies and reduce running costs.
According to the benchmark, the sector has the opportunity to gain a 2 per cent difference in net profits through reducing energy costs, which is just one reason why sector pathfinders are investing 9 per cent of annual energy spend in efficiency initiatives.
The hospitality groups that SaveMoneyCutCarbon works with, as well as proactive companies in many other sectors, all have seen the financial and environmental benefits of managing energy and water consumption more efficiently.
While the Hospitality Carbon Reduction Forum benchmark shows that savvy outlets are investing in efficiency initiatives because these clearly will save them money in the longer term.
Our practical experience is that the payback on energy initiatives like LED lighting, water saving products, heating efficiency and intelligent energy controls is rapid. It makes sense to invest now, as energy bills have doubled in a decade and ever-rising energy production costs mean no relief from high annual rises over the next ten years.
According to the report, Chris George, Whitbread Group’s head of Energy & Environment says: “We are committed to reducing our environmental footprint both to support our business performance and as part of our obligations as a responsible company. The industry benchmarking exercise enables us to identify the key areas where we can improve, to share and adopt best practice across our industry.”
Of course, there are wider issues than the balance sheet and the hospitality sector is more keenly aware of broad sustainability issues than many other industries, not least because of the intensive, often 24/7 nature of the business.
Our hospitality clients, including Carlson Rezidor, Puma Hotels, Ralph Trustees and other leading groups, work with us not simply to reduce running costs, but rather to ensure sustainability is a focus for both business and the environment.
And this was supported by the fourth Green Paper published by energy efficient refrigeration supplier, Gram during the Hotelympia event in London last week showing that more operators and chefs now believe themselves to be ‘green’ compared to when the report was first launched six years ago.
But a big blocker on making moves in sustainability is having no budget to invest, according to the green paper. This is an area where our full service energy saving strategies can help. Our expert team can demonstrate very clearly the business case for going green, through survey, measurement, testing and monitoring. Detailed reports show the savings in cash terms and reduction in carbon emissions, as well as payback time.
Carbon Trust accredited
As a Carbon Trust accredited supplier, we have long promoted with them the benefits of energy and water reductions. It makes good business sense and is pretty beneficial for the planet!
Like the Carbon Trust, we know that savvy management of energy and water efficiency strategies will help greatly to embed sustainability, both in commercial and environmental terms in all businesses.
Dominic Burbridge, the Carbon Trust’s associate director responded to the benchmark news by advising Big Hospitality: “Being green means being more efficient. Over the ten-year lifespan of your kitchen equipment, more than 80 per cent of your money is spent on energy consumed and less than 20 per cent on the equipment itself. Energy prices continue to go up year after year so investing a bit more upfront in energy efficient equipment is a no-brainer for any business no matter your size.”
We’d give that statement a big thumbs-up but also say that energy and water savings strategies extend well beyond a busy kitchen. Every company will benefit from LED lighting in public and working areas, smart controls in guest rooms, intelligent heat pumps, boiler efficiency, eco taps and eco showers, even down to the small but miraculous tap aerator.