Consultants Viewpoint-Of Energy Efficiency, Warewashers and Unit Economics

The more we as an industry can quantify and accelerate the return on investment a piece of equipment produces, the better our chances for success.

 Andy Simpson
Andy Simpson

When foodservice operators are not growing in terms of revenue or number of locations, their focus shifts to the subject of unit economics in an effort to drive costs from their equation and enhance the margin on what business they have been able to maintain. A natural byproduct of this shift in focus is that concept of energy efficiency seems to be gaining a wider audience within the foodservice community. This is particularly the case when it comes to buying or specifying a warewasher.

Indeed, warewashers are in a unique position to help reduce operating costs because they use all three utilities: electricity, gas and water. So, it stands to reason that the more efficient the unit and its related items, the more savings for the operation. Unfortunately, this line of thought is not as prevalent as one would hope in today's foodservice industry, particularly among the less sophisticated operators.

In fact, it is common for many foodservice operators who lease their dish machines to look at this part of their business as a monthly expense rather than a capital one. This approach can be a mistake for restaurants looking to lower their operating costs because it typically does not take into account the amount of money they can save on water and energy by purchasing a more efficient warewasher. By the same token, buying a warewasher that promises to lower energy consumption but does not do a good job of actually cleaning automatically negates any savings it generates due to the still soiled-items requiring additional runs through the machine.

That's why it is important to thoroughly examine every aspect of a warewasher purchase. Just because today's foodservice industry features lots of eye-catching options, it does not necessarily mean every unit is right for every operation. And it's the little things that can make a difference. For example, one rep I was working with suggested an electric booster heater accompany the warewasher we were preparing to install at a customer's location. Including such an item would have negated the savings the customer would otherwise have received because of its higher operating costs when compared to the appropriate gas booster heater.

The number of racks a unit can process per hour is a common way to evaluate a warewasher's performance. But it is important to tie that performance level to specific metrics associated with the individual foodservice operation. For example, how many racks can staff process during a given hour and how much soiled dishware does the business generate? Many energy-saving units can process more than 200 racks per hour; however, knowing whether the rack amount is a factor in the decision comes from knowing the operation. Therefore base any cost savings on real-world circumstances.

That is why a team-oriented approach is recommended when trying to implement the solution that's best for the operation. It is important for the reps — be they dealer or factory salespeople — to aid with the actual research by spending time in the facility observing how staff interacts with the equipment and their surroundings. This gives the rep hands-on experience with the operation and allows them to better collaborate with the other participants in the decision-making process. On a recent project, I asked several reps to take these steps. One rep spent more time than the other in the customer's operation, and the results and recommendations presented clearly illustrated that.

The two most common mistakes made when researching a new piece of equipment are not getting enough information from alternative sources and not understanding the technical aspects of a product. It is important to know all the options available before making a purchasing decision, and the purchasing team's sphere of information should extend beyond the supplier's claims. Energy Star ratings represent a nice starting point, but your equipment research should extend beyond those ratings to see how these items perform in an actual foodservice environment and all that comes with it. Consult accredited third-party testing organizations such as the Food Service Technology Center in San Ramon, Calif.

Equally important is taking the time to weed out the benefit claims that do not affect a specific operation. Review the information the vendors provide and ask lots of questions to better understand what you are getting. It is better to go with technology that has been thoroughly vetted instead of being on the bleeding edge when something new hits the market.

The more we as an industry can quantify and accelerate the return on investment a piece of equipment produces, the better our chances for success. Operators are starting to better grasp the dual benefit of reducing both energy and water costs. As a result, operators are very receptive to the idea of paying more up front for a piece of equipment if you can show them the unit will pay for itself through lower operating costs in two years or less. The longer the payback time, though, the less the operator is interested.

For example, one operator customer elected to pay more up front for a specific warewasher because we were able to determine that doing so would lower operating costs by $5,000 per year over the life of the unit. That meant that within two and a half years, this machine would pay for itself. Even more impressive, the operator will continue to realize those savings over the course of the product's entire life cycle, which should span at least ten years.

And in light of the tighter credit markets brought on by the challenging business climate, any manufacturer that can offer financing has an advantage over its competitors. For example, one operator client of mine was looking to replace one ice machine and wound up buying multiple units from the manufacturer due to the availability of financing.

The good news is that it appears as if energy-efficiency is playing a greater role in operator replacement purchases, particularly in warewashers. Of course, educating operators on the need to look longer-term to better manage the capital expenditures that often accompany a replacement purchase remains a challenge. In order to properly handle a replacement purchase it is important to know the status — meaning age, operating condition and the like — of each piece of equipment. That's because these pieces of equipment don't come cheap, so making the proper purchasing decision requires time to plan and allocate funds.

While the concept of energy-efficient warewashers is not a new one, it is encouraging to see it gaining more and more traction within the foodservice industry. Even better, the notion of energy efficiency is really starting to permeate the decision-making process for any piece of equipment in a foodservice operation. Because, at the end of the day, the more efficient the foodservice operator is, the stronger the industry becomes, and that benefits us all.