When the recession hit in earnest during the fall of 2008, the impact of consumers’ tightened purse strings was felt quickly. Lost confidence in the strength of the economy, new worries about income, and a focus on saving money sent people into a sort of hibernation with their usual discretionary spending. What was one of the first behavioral changes made by consumers? No more eating out.
For the fast-casual restaurant industry, it was a heavy blow. Across the board, sales fell and growth slowed. Despite their position as one of the most successful chains of its kind, California Pizza Kitchen didn’t escape the drop in customer counts. The company began taking a closer look at expenses to see where there was opportunity to save. A $21 million-a-year line item stuck out like a sore thumb: energy expenses.
Restaurants are among the biggest energy consumers of all types of commercial spaces. Beyond the demand created through heating, cooling and lighting, the cost of sanitation and the utilities needed to run cooking equipment all add up to an energy spend that can be a significant percentage of operating expenses.
“To make matters worse, no one person in the organization was taking ownership of this huge cost,” says Clint Coleman, Senior Vice President of Development for California Pizza Kitchen. “Once we realized how much we were spending on that one operating expense, it was clear that this was where we had the opportunity to make the biggest impact in terms of cost-cutting.”
In January 2009, concern over this $21 million cost led California Pizza Kitchen to seek the help of energy management experts ENGIE Insight to gain a better understanding of how California Pizza Kitchen could better manage its collective energy use.
ENGIE Insight had already been processing the company’s expenses for years and had already developed highly detailed profiles of energy use trends for every restaurant in the company’s portfolio, representing more than 250 locations. This vast database of energy consumption data that had been built during the bill payment and auditing process was the key to the success of California Pizza Kitchen’s energy management program.
ENERGY PERFORMANCE REPORTS
Armed with this data, ENGIE Insight was able to quickly identify and prioritize areas for improvement. This consumption data was integrated into monthly Energy Performance Reports (EPRs) that drill down to site-level detail. Facilities with similar energy requirements commensurate on climate, size, and hours of operation were grouped for easy comparison. The EPRs allows users to compare site performance against portfolio averages as well as Department of Energy database averages.
“These reports make it possible for our company to understand where we are and navigate where we can go,” says Coleman. “We were able to establish a performance benchmark, set goals, and report very specifically on our progress.”
Coleman’s team put ENGIE Insight’s EPRs to the test, using the data identify the restaurant chain’s worst performing locations, analyze what it was about those sites that made them outliers in their group in terms of energy use, and put solutions in place that would get their use back down to the portfolio average.
The EPRs allowed Coleman to make the smart decisions about behavioral changes and equipment upgrades. With better facility intelligence, the company was able to validate conservation efforts and began by targeted low- and no-cost measures:
- Requesting that all HVAC service providers conduct free HVAC inspections and tune-ups
- Switching to compact fluorescent light bulbs
- Adjusting temperature set points to maintain consistent results
- Closing window shades
- Running dishwashers only when dish trays are full, which reduces water, chemical and
- Installing low-flow aerators on hand sinks
- Performing monthly reviews of restaurant results to identify the worst performers
These energy conservation initiatives helped California Pizza Kitchen quickly reduce energy consumption, drive savings and report results:
December ’09 year-to-date compared to December ’08 year-to-date:
- Electricity: Usage decreased by 4.3%
- Natural Gas: Usage decreased by 2.82%
California Pizza Kitchen’s energy problem was not uncommon. While they are experts in managing the basic costs associated with running their business, they lacked a fundamental understanding of energy’s impact on the bottom line and were unaware of the best actions to take to reduce energy costs. Once equipped with the right data, they were able to translate what was once a big unknown into big savings.
“This is just phase one,” says Coleman. “We’ll be overhauling a lot of our equipment to achieve greater energy efficiency, and with ENGIE Insight’s reporting tools, we’ll be able to show how much we save down to the last penny.”