Cut your venue's energy costs with advice from the experts
Soaring energy bills present a serious challenge to hospitality operators in 2023. Experts and panelists at The Caterer's energy summit shared ideas and experiences on how to cut costs
When it comes to the outlook for the energy market, there is some good news for operators. Wholesale energy prices are no longer at their peak and should continue to fall, so bills should eventually go down. In the meantime, though, government support in the form of the Energy Bill Relief Scheme (EBRS) ended in April.
This represents a huge blow to businesses, particularly those who agreed fixed-price deals when prices were at a peak.
The EBRS has been replaced with what David Sheen, public affairs director at UKHospitality, describes as the "significantly less generous" Energy Bills Discount Scheme. He adds: "We are very concerned about the impact that will have on businesses. Overall, the sector is pretty much paying double at the start of this year compared with what it was paying in 2022. And when the EBRS ends, we expect bills to go up by a further 82%."
Energy suppliers have limited hospitality's supply
While cheaper energy options are starting to become available, the best offers aren't always accessible to the hospitality industry, Sheen warns. In fact, a number of suppliers are refusing to provide any deals to the sector.
He says: "It looks like some energy suppliers have left part of the market. They've had a limited supply of energy they can purchase and they have concentrated on their bigger sectors and bigger customers.
"We have an example of a very big, multi-site operator that sought quotes from 12 energy supplies and got three responses, and one of those withdrew pretty much straight after. That is absolutely something that Ofgem needs to regulate in my view."
Worries about supplier behaviour have not gone entirely unnoticed by regulators. Ofgem is conducting a review into the non-domestic market, and last month told the chancellor it was "very concerned" about reports it had received, including high contract rates, security deposits and standing charges.
But Sheen points out that operators do have some leverage in negotiating terms. "Contact your suppliers and discuss flexible payment terms, or negotiation," he says. "And be actively monitoring the market. See whether there are better deals out there. Obviously, for those tied into extortionate deals at the moment, that's a medium-term option."
Everyone should double-check their bills to ensure the discounts that do exist have been applied correctly. And where large deposits have been demanded, operators should talk to their energy suppliers and ask for some of that cash back. "I think that is something suppliers should be open to," says Sheen.
Technology to improve energy efficiency of venues
Operators are turning to other methods to cut costs further. For those who have the upfront capital, replacing old equipment can save significant sums. For example, heat pump tumble dryers can reduce energy costs by 50%, says Egizia-Maria Felice, marketing manager at Miele. She says that the finance director of a client that had bought 450 heat pump dryers "came to us at the end of the installation and said, ‘I am not worried about this investment, because I know in one year's time I will have my money back.'" Meanwhile, she points out that technology solutions can provide granular data to help operators manage energy costs.
Restaurant Next Door in Frodsham, Cheshire, took an entirely different approach. It may not have been cutting-edge tech but it was no less innovative. The restaurant literally pulled the plug on power and ran a nine-course tasting menu evening without any gas, electricity or battery power – including prep.
The idea was partly born out of protest. "We felt like we were totally out of control of what was being imposed on us," says Next Door co-founder Vicki Nuttall. "I think a lot of businesses in hospitality feel like we've come through the worst storm to face our sector and now we're right in it again. And almost in a harder situation to manage costs."
Nuttall says Next Door "stripped everything down" and took inspiration from the heritage of its 17th-century building.
"The cooking side of the concept was actually relatively easy," she says. The harder part was making sure everything was compliant. "You can't just throw legislation out the window in terms of health and safety and food safety."
She adds: "I have joked we should sell our risk assessment but in all seriousness this became a 100-page document I had to jump through hoops to get signed off. I feel there needs to be more support for innovators wanting to drastically tackle systems."
After months of planning, the evening happened in October, when it was cold enough for food storage but not too cold for the guests. "We actually found on the evening the dining room was exceptionally warm from the natural heat of the candles," she says. Dishes were plated at the table into a central bowl, with the flavours from each separate course designed to blend together. Equally, the drinks pairings flowed on from each other, so there was no need to change a glass every time.
The evening was intimate and informal, with staff responding to guests' needs rather than being rigid about serving timings, says Nuttall. "There wasn't all the faff around replacing everything on the table. It was just about the essence of the flavour in the glass, the plate and our conversation. All night, we were guiding guests through a dark experience. We've massively learned from it. The way we approach service, the way we use items that we take for granted. The tasting menu service is all very elaborate – it's fresh, everything, every time. We had to turn that whole concept completely on its head."
Savings on the night were negligible due to investments in specific equipment, but the pay-off was still huge. "It all came from a collaboration of brain power from our whole team. When we saw it actually work, it was incredible. And we're saving a lot of money by operating differently now."
Bringing down venues' energy costs via automation
Richard Palmer, director of the Headland hotel in Newquay, Cornwall, also decided to take a proactive approach in response to the exponential increase in energy costs last year.
Palmer says: "It was a real crash course last summer. We got to the end of September and were staring at an 800% rise in our electricity bill, because we had signed up three years ago to a very good contract."
The hotel has changed the way it buys energy and avoided the higher costs associated with a fixed contract since prices have come down. "We've moved into a flexible arrangement," Palmer explains, "so we buy energy as a commodity as part of a pot of other companies."
It also undertook a thorough energy review. Palmer says that because the hotel tends to have a seasonal workforce, automation has been key – as staff turnover can make changing behaviour difficult.
"My advice is to automate as much as you can within the business," he says. The Headland has installed timers on all the gym equipment, so it automatically switches off when the facilities close. The lights also automatically switch off when not in use.
"We have a heating system that's attached to our property management system, so if a guest checks in, the heating goes on, and when a guest checks out it goes off. I'll admit I started by lowering that to 19 degrees, thinking, yes, that's perfectly warm enough. Within two weeks I'd pushed it back up to 21 degrees. That works for 90% of guests." The front-desk team can also crank the heating up to 24 degrees if guests complain it is still too cold.
Some changes originally intended to be temporary have become permanent, he adds. "We have 11 swimming pools and hot tubs here – six of which are outside. Instantly, you're going, ‘right, in the winter that's going to cost an awful lot to heat'. We decided to turn one of them into a cold plunge pool next to a hot tub and make it an experience. We were going to turn that back on this summer but we're not now because it's been very popular.
"So like Vicki [from Next Door], we've changed the way we've operated in some areas and actually the guests have enjoyed it more."
If there's one bright spot amid the gloom, the crisis has changed the way hospitality – and everyone else – thinks about energy usage. But without further help, 2023 will undoubtedly be a struggle for many in the sector.
Sponsored by Miele Professional
Miele Professional works in partnership with small and large businesses providing high-quality dishwashing and laundry solutions. As a member of the United Nations' Global Compact since 2004, Miele has pledged to empower clients across all sectors in their sustainability goals. Miele's efforts to support businesses in HoReCa include: machines that last longer and reduce downtime, shorter cycles with optimum results, a reduction of 15% in water and energy consumption (up to 60% for drying technologies),* and digital management systems empowering clients to run machines more efficiently, intervene promptly when faults occur, and save on costs.
*Data varies across region
