Restaurant utility costs: Are you paying too much?
The cost of business energy for restaurants can quickly add up. With electricity for lighting, gas and/or electricity for cooking etc, restaurants easily consume a large amount of energy. Read on to find out how to reduce these costs and make your restaurant more energy efficient.
Restaurant utilities: How much should you be paying?
The first step to taking control of the cost of business energy for your restaurant is to understand the different parts of your utility bill and how much you should be paying.
The main items on your bill are:
- Standing charge - a set price you are charged per day for using electricity and gas
- Unit rate - the amount your provider charges you for every unit of energy you use per kWh.
- VAT - this is usually charged at 20%
- Climate Change Levy - this is a tax placed on businesses to encourage them to be more energy efficient. You can avoid paying this if you use less than 33kWh of electricity and/or 145kWh of gas per day, or have a 100% green energy tariff.
With these charges in mind, how much should business energy for restaurants be? The amount depends on a few different factors, including your location, the size of your restaurant, your energy supplier and, most importantly, how much energy you use.
In the table below we have outlined the average energy usage for different restaurant sizes.
|Type of business||Number of employees||Turnover||Average annual electricity usage||Average annual gas usage|
|Micro business||Less than 10||Less than £2 million||5,000-15,000 kWh||5,000-15,000 kWh|
|Small business||10 to 49||Less than £10 million||15,000-25,000 kWh||15,000-30,000 kWh|
|Medium business||50 to 249||Less than £50 million||25,000-50,000 kWh||30,000-65,000 kWh|
Lower the cost of business energy for restaurants
The easiest way to lower the cost of business energy for restaurants is to switch to a cheaper energy supplier. Comparing business energy deals is the best way to find a good deal that is suitable for your restaurant’s needs.
You can do this comparison yourself, but it does take a lot of time and effort. For a fast comparison of all the deals on the market, give Selectra a call on 020 3318 3633 or get a free online quote. Our energy agents can compare deals and find the best one for your restaurant in just a few minutes.
Here’s a list of a few things to look out for when comparing business energy for restaurants.
1. Fixed-rate tariffs
Fixed-rate tariffs are cheaper than variable tariffs. While it can be a bit scary to tie yourself into a contract with a provider for one, two or more years, it can be very rewarding when it comes to your energy bills.
Fixed-rate tariffs mean your unit rates stay the same so you are protected against sudden increases in the wholesale price of energy. Moreover, when you know how much energy you use, you can predict how much your energy bill will be and be better able to budget.
Did you know that whenever more electricity is generated than consumed, energy prices fall? If prices drop below certain levels, energy suppliers are paid to take energy off the grid.
If you opt for a variable tariff, the ideal energy supplier for your restaurant should offer you Plunge Pricing that lets you take full advantage of such wholesale price drops. That way you get paid for the electricity you use during this time.
3. Price protection
Again, if you opt for a variable tariff, make sure it offers price protection against sudden spikes in the price of energy.
When there’s an excess of energy used rather than generated, wholesale prices will rise. These price spikes in energy could last up to an hour, but a good electricity supplier should protect you from them. Ask if your new supplier can guarantee a ‘Price Cap’ that will ensure you don’t pay any more than, say, 35p / kWh for your restaurant’s electricity.
Find better business energy.
Save an average £1,305* on your business energy bills when you switch with Selectra.
*Of customers who made a saving on a three-year business energy contract when switching through our trusted partner Bionic, the average amount saved was £1,305. Based on data between January 2020 and May 2020.
8 ways to be more energy efficient and reduce bills
Follow these eight steps to make your restaurant more energy efficient and drive down the cost of business energy for your restaurant.
1. Strategise your menu
The cost of ingredients is not the only factor to think about when calculating how much you’ll charge for each menu item.
Chat with your head chef and find out what cooking strategies and equipment are used to prepare the dishes on your menu e.g. do they involve using the oven for an extended period? You can charge a bit more for dishes that require high energy use to prepare.
2. Optimise your fridge
To ensure your fridge performs well while using minimal electricity, do the following:
- Keep fridge doors closed whenever possible.
- Check the seals on the fridges are intact.
- Defrost your fridge at least once every two months.
- Separate heating equipment from the fridge so that they’re not counteracting each other's energy performance.
- Don’t cool foods below the required temperature (the table below outlines the recommended temperatures for different food groups).
|Temperature code||Product temperature||Suitable for|
|L1||Below -15 °C/-18 °C*||Ice cream and frozen foods|
|L2||Below -12 °C/-18 °C*||Frozen foods|
|M0||Between -1 °C & +4 °C||Poulty and meat|
|M1||Between -1 °C & +5 °C||Meat and dairy products|
|M2||Between -1 °C & +7 °C||Processed meat and dairy products|
|H1||Between -1 °C & +10 °C||Produce and canned and bottled drinks|
|H2||Between -1 °C & +10 °C||Canned and bottled drinks|
3. Consolidate deliveries
If you’re receiving deliveries of food inventory one day and drinks inventory on another, you’re wasting valuable energy and money. As you restock on each occasion you’ll be leaving the doors of the fridge and cold room open. If you add to this to energy costs while switching on and off the lights to restock, your bills can quickly escalate.
As a solution, instead of receiving your supplies on different days, ask your vendors if they can combine deliveries on the same day. Not only will you kill two birds with one stone, but you'll also be paying less for it.
4. Decrease heat usage
Heating can total up to 60% of your restaurant’s energy costs. Simply reducing the temperature by just 1°C can shave almost 10% off your total energy bill. Here are some handy tips to reduce the energy spent on heating.
- In the kitchen, fit TRVs (thermostatic radiator valves) to improve temperature control.
- In the bathrooms, install energy-efficient hand dryers that don't use heating elements.
- Optimize your water temperature so you don't use water that's hotter than it needs to be. Mandatory dishwashing temperatures in the foodservice industry are around 60 °C.
- Get your boiler serviced regularly to make sure it's running as efficiently as possible. A regularly serviced boiler can reduce your annual heating costs by as much as 10%.
Bonus tip: Make sure you get adequate boiler cover so you are insured for repairs and replacements.
5. Switch to energy-efficient bulbs
Lighting typically adds up to around 25% of total restaurant utility costs. If you have any incandescent tungsten bulbs, remember that they only last from 1,000 to 2,000 hours. Constantly replacing them will cost you dearly. Instead, replace them with 60 watts LED bulbs which last from 10,000 to 25,000 hours.
With this simple step, your restaurant can reduce consumption by up to 80%. Good alternatives to LEDs are halogen incandescents and CFLs (compact fluorescent lights). These are worth considering if you feel that they complement your restaurant’s decor better than LEDs.
For areas that are not frequently occupied, such as bathrooms, the stock room or utility room, install occupancy sensors. These will only turn on the lights when someone enters the room and they turn off after a set time has elapsed. This will reduce your restaurant’s energy usage by up to 30%.
6. Switch off appliances that aren’t being used
Don’t leave electrical devices in standby mode if they aren’t being used. You’re wasting money unnecessarily for the energy they’re consuming!
The table below shows some of the devices that are most notorious for being left in standby mode and being a big drain on a restaurant's energy costs.
|Restaurant Kitchen||Restaurant Reception|
7. Use smart technology
Smart technology, such as smart meters, smart plugs and smart thermostats are great ways to control your energy usage and therefore reduce the cost of business energy for restaurants.
Such technology can let you make the most of cheap energy prices and also control your smart devices while you are busy or not even in the restaurant. With IFTTT apps (If that then this), you can connect the devices on your phone and set up triggers that will make your more energy efficient, such as:
- Programme your smart thermostat to heat at the cheapest times of the day.
- Use smart plugs to turn appliances on and off when certain goals are set e.g. turn the air conditioner off when it reaches 24 degrees.
- Set up a visual cue to remind you to switch on appliances when energy prices dip. For example, have a bulb turn green when it's time to put the washing machine on!
8. Replace inefficient equipment
When the time comes to replace restaurant equipment, make sure you check the energy labels of new devices you are considering buying. An energy efficiency rating of A+++ or A++ is the best.
- An A +++ washing machine can save up to £20 a year compared to a five-year-old model.
- An A +++ refrigerator can mean a saving of £80 per year for your restaurant.