How Restaurants Can Keep Their Utility Expenses in Check
Owning and operating a restaurant can be an exciting and rewarding experience, but it can also be an expensive one. The cost of utilities, equipment, payroll, and supplies can quickly add up, making it challenging for restaurateurs to turn a profit. In particular, utility expenses can add up. For example, restaurants use roughly 2.5 times more energy per square foot than other commercial buildings. Whether you're operating a bar or full-service restaurant, how much you dish out for utilities, such as gas, electric, phone, and Wi-Fi, can significantly impact your bottom line.
Additionally, the cost of equipment, point-of-sale (POS) systems, and other essential technologies can add to the restaurant's financial burden. As such, finding ways to keep utility expenses in check is critical to the success of any restaurant. In this blog, we'll share some tips and tricks for keeping your restaurant's utility expenses in check.
Average Restaurant Utility Costs
Before we dive into ways to keep utility costs low, let's explore the average utility costs for restaurants. Understandbly, these costs can vary significantly based on factors like the restaurant’s size, location, and type. Yet, some ballpark figures can serve as a useful reference.
As a whole, restaurants in the US dish out approximately $3.75 per square foot per year on electricity and $0.85 per square foot on natural gas. Once you add in everything else, utilities can chew up anywhere from 5-10% of a restaurant’s total operating costs.
Since the onset of the COVID-19 pandemic, everyone, from restaurants to private residents, has seen a spike in utility expenses. Since 2021, electricity prices have increased by 15.8%, primarily due to the high cost of natural gas. This uptick in costs highlights the growing importance for restaurants to find ways to keep utility expenses on a tight leash.
Shop Around
When it comes to finding the best gas, Wi-Fi, electricity, and phone provider for your restaurant, it's essential to research different utility providers in the area to see who offers the best service and rates. If you're shopping for phone and internet services, consider using bundle options to reduce costs. For utilities like gas and electricity, identify several potential providers and compare their rates, plans, and customer reviews. You might also consider reaching out to providers directly or using online comparison tools to make the process easier–– this approach may provide you with a more comprehensive view of your options. By comparing rates from different providers, you can find the best deal and potentially save hundreds of dollars monthly.
Another option for reducing energy expenses is to work with an energy broker, or a professional specializing in helping businesses and organizations get the best rates for their energy needs. For example, when it comes to electricity, an energy broker can help you find the best electricity rate for your restaurant or bar. They can do this by conducting energy audits, shopping for providers, reviewing contracts, monitoring and managing energy usage, and more.
Negotiate with Providers
Don't be afraid to negotiate with providers to get the best pricing for your utilities. Before you begin negotiations, conduct some research on the current market to get a better understanding of the prices providers are offering. You should also know your restaurant's usage, which can help you understand if the proposed rates are reasonable. Many providers offer special deals and incentives to new customers, and you may be able to negotiate a better price or free installation. If you've been with the provider for some time, don't hesitate to highlight your customer loyalty or ask for discounts related to early payment or signing long-term contracts.
Other Tips For Reducing Your Utility Costs
Cutting back on utility expenses may take more than working with providers to find the best rates. It may also require reviewing your current operations and habits to identify cost-saving opportunities. Some helpful tips for your restaurant include:
Implementing Utility-Saving Protocols
One way to reduce utility expenses is by implementing protocols encouraging employees to use energy and water efficiently. Turning off lights and equipment when not in use can save significant electricity. Encouraging employees to report any leaks or malfunctions can also help prevent water waste.
Investing in Energy-Efficient Equipment
Investing in energy-efficient equipment is another way to reduce utility costs. Energy-efficient equipment uses less electricity, gas, and water, which can add up to substantial savings over time. When shopping for new equipment, look for products with the ENERGY STAR label, which indicates that they meet energy efficiency guidelines set by the U.S. Environmental Protection Agency.
Using Energy-Efficient Lighting
Switching to energy-efficient lighting is another way to cut back on electricity costs. LED bulbs, for example, use up to 75% less energy than traditional incandescent bulbs and can last up to 25 times longer. This means that you'll not only save on your electricity bill but also replacement costs.
Maintaining Restaurant Equipment
Proper maintenance of restaurant equipment is crucial for ensuring that it runs efficiently. Regular cleaning, lubrication, and equipment inspection can help keep it in tip-top shape and prevent breakdowns, which can be costly to repair. Ensuring that equipment is running properly can also help reduce its energy consumption.
Monitoring Your Water Consumption
Monitoring your water consumption is an essential step in reducing water costs. Keeping track of water usage and identifying any areas of waste can help you implement changes that will save you money. For example, installing low-flow faucets and toilets can significantly reduce water usage without affecting the quality of service. Regular monitoring and establishing a baseline can also help you spot upticks in use, which can signify potential issues.
Changing Filters Regularly
You should change the filters on your HVAC systems and other equipment regularly. Dirty filters can reduce equipment efficiency, making them work harder and driving up energy costs. Changing filters regularly can help ensure that your equipment is running at maximum efficiency.
By implementing these tips, restaurants can cut back on utility expenses and save money without sacrificing the quality of service they offer. In addition to these suggestions, regularly reviewing your utility bills and keeping track of your usage can help you identify areas where further improvements can be made.
Utility rates and expenses may be a lot to consider, but your POS system doesn't have to be. VersiPOS can be a valuable tool for managing restaurant operations, including tracking inventory, managing orders, and processing payments. By increasing efficiency and reducing errors, VersiPOS can help you improve your bottom line, allowing you to focus on providing excellent service to your customers. Ready to see how VersiPOS can transform your restaurant operations? Contact us today to learn more about how we can help your restaurant operate more efficiently.