THE GREEN REPORT: When will efficiency take precedence over price for kitchen owners?

There is an appreciation that operators need to be running more efficient kitchens in future, but this doesn’t always translate to sales of energy efficient models when equipment is being purchased. Is 2018 set to herald the year of change?

Manufacturers have invested heavily in making their equipment more efficient in recent years. But if you talk to suppliers in the industry you’ll often hear it said that operators are still inclined to consider other factors — particularly price — over and above efficiency.

More often than not, this is down to institutional or economic reasons: buyers are dictated by fixed capital budgets and therefore what they can get for their money, rather than how much the equipment will save them the long run, may understandably influence the decision that is made.

Ultimately, everyone would put their hand up to wanting the most efficient piece of kit around, but if the cost is too prohibitive, or the incentives to make that investment do not exist, then operators will simply look for the next best affordable alternative.

Work is being carried out at European level that will eventually lead to the benchmarking of energy efficient equipment across multiple commercial foodservice categories.

This is already the case with refrigeration, but while it remains confined to just one sector of the market there will always be challenges, suggests Simon Lohse, managing director of Rational UK: “There is no standardisation in efficiency labelling for most mainstream catering equipment. This makes it very difficult for operators to compare efficiency of like-for-like models, and they can easily be confused about which machine can offer real savings for their catering operation.

“Energy efficient equipment often uses new technology and some end-users, resistant to change, may find adaptation to new equipment more difficult. Without any real industry incentives for purchasing more energy efficient equipment, change can be slow. Conversely, machine purchase price is absolutely comparable!”

Lifetime operation costs are a key focus for Welbilt, manufacturer of Convotherm combi ovens.

David Rees, group marketing manager of HTG Trading, supplier of Scotsman and Comenda equipment, says that buying new equipment is a rational decision and almost always based on what you can afford. “If a greener machine is your preference, but there isn’t the money to support it, then a less energy efficient machine, that fits the budget, may have to be the choice.

“Smaller operations may be uncertain about the future and need to make decisions based on a shorter financial projection. Because of this uncertainty, even if they can afford greener equipment, they may opt for a smaller investment and review it two or three years down the line. Bigger operators tend to have green policies as standard and are penalised for not adhering to them. They plan for the future and their equipment purchasing decisions are normally based on the lifecycle costs rather than the capital costs. In this instance, energy efficiency and running costs will be crucial buying criteria.”

Suppliers point out that one of the biggest challenges remains the potential discord that exists between departments within end-user organisations. Most will recognise a scenario where an operator expresses a desire for more energy efficient equipment, but ultimately comes up against a department that may not be prepared to provide budgets accordingly in order to reflect this preference or demand.

Steve Hemsil, sales director for the UK and Ireland at Welbilt, says: “Over the last few years, cost of equipment has been squeezed to enable a lower price point and more affordability for operators. As a result of this, operators are now not looking to pay a higher price point for more efficient equipment. This somewhat leaves manufacturers in a catch-22 scenario and can be disappointing, as if operators looked at investing in more energy efficient equipment with a slightly higher initial purchase price they could save in energy costs over the lifetime of the equipment. This is certainly an area of focus for us and we are prepared to continue to work with operators in the future to ensure that they are aware of the benefits of equipment with greater efficiencies.”

The fact that some operators focus only on price is because they have become disillusioned with the tone of conversation from the catering equipment supply industry”

Wexiodisk is another company that is all-too familiar with the issue of inter-departmental conflict among operators. UK & Ireland country manager, John Shepherd, says: “In these cases, where price is considered over energy consumption and lifetime running costs, it is largely down to the fact that the person purchasing the equipment and the person responsible for the utility bills are two separate people. Both will be focusing on achieving their targets for the purchasing process.

For one, the target will be to achieve the best or lowest price possible for a piece of equipment, as this is what their budgets will require, and this decision maker will therefore just look at the initial purchase price as opposed to looking at the whole lifetime cost of a piece of equipment. The other person will be responsible for achieving the lowest energy consumption and therefore spend on utilities, however they can only go on the equipment already in use in the kitchen.”

Shepherd says the only way for operators to achieve the objectives that exist between different departments is to promote greater collaboration. “It requires a joined-up approach in order to achieve the long-term benefits for the business,” he suggests.

Some manufacturers insist the tide is turning though, and while they acknowledge that price will always have a significant part to play in any catering equipment purchase, it is not the be-all and end-all for everyone.

Simon Frost, director of sales and chain accounts at Hoshizaki, says: “We are beginning to see a change in kitchen specification to focus more on energy efficient equipment, particularly in chains and high street businesses. As manufacturers continue to research and develop new technology and ways of making their appliances more economical to run, purchase costs remain higher, often because of the additional research and the inclusion of the very latest hardware and software. With a longer return on investment from a higher initial purchase price, businesses can find it difficult to justify the purchase of energy efficient equipment. This is frequently the case for independent businesses; however, some of the large high-street chains and groups are now seeing the savings gained across an entire estate, despite the higher initial outlay.”

In-use costs will typically amount to 95% of the overall lifetime cost of a piece of kitchen equipment.

At Grande Cuisine, director Steve Hobbs thinks that if the client’s only concern is price then they would do well to remember the old adage of ‘buy cheap, buy twice’.

He says: “In business it is not possible to get a lot and only spend a little. However, this focus on price alone is changing and increasingly lifetime cost and energy efficiency are being considered as operators look more towards striking a balance between capital investment and ongoing operational costs. Of course, all operators want a ‘stress free’ kitchen where they can concentrate on getting good food on plates in front of paying customers. If we can demonstrate our ability to deliver a reliable product with good back-up service and maintenance then the purchasing decision comes down to a combination of budget, life expectancy, energy consumption, ease of use/cleaning and return on investment.”

In an industry as competitive as the foodservice sector, it is perhaps inevitable that some operators will view capital cost as the driving force in the specification of equipment such as refrigeration. However, Karl Hodgson, sales director of Adande Refrigeration is among those who insist it is becoming “increasingly apparent” that basing purchasing decisions on initial outlay alone is a false economy.

He remarks: “There is a common misapprehension that energy saving and environmentally-sustainable equipment comes at a premium price, but in fact the converse is true. Refrigeration is an integral aspect of any foodservice operation and the optimum performance of fridges is fundamental in maintaining product at the correct temperature for food quality, safety and reduced waste. There is also a degree of inertia within the foodservice sector, with operators and individuals sticking with conventional upright refrigeration equipment with which they are familiar. This leads to a reluctance to embrace new technology with associated energy saving and operational benefits.”

There is a common misapprehension that energy saving and environmentally-sustainable equipment comes at a premium price, but in fact, the converse is true”

Paul Crowley, marketing development manager of Winterhalter UK, offers a similar take on things, noting that people are conditioned to consider price as a final determining factor.

“Buyers look at the bottom line and the initial capital outlay. This is often in relation to the entire kitchen, and not just the warewashing element. Inevitably they have a budget to work to. This is not a reliable way to look at costs. From work we undertook with The Carbon Trust, it is clear that over the lifetime of a warewashing machine (and more likely any piece of kitchen equipment), only 5% will be the initial capital outlay of buying the machine and 95% is the in-use cost. This situation can be exacerbated by third tier or budget machines, where cheaper upfront costs can lead to a false economy. Budget machines will inevitably cost more to run. For example, operators may be comparing a premium machine with a lifetime of 10 years as opposed to a budget machine that will need replacing every two or three years.”

He continues: “In reality, most warewashing buying decisions are made by both procurement managers, who are looking for the cheapest purchase price possible and operational managers, who are looking to minimise running costs. These two areas are at odds and can create conflict when choosing new equipment. Add in CSR and sustainability departments and the waters muddy even further. Many more operators, in the casual dining sector particularly, are becoming more progressive and forward thinking. In reality, those with a medium number of sites to consider seem to have a real understanding of their day-to-day operating costs and are therefore looking at energy efficiency as a factor in their buying choices.”

Operators need to adopt a joined-up approach internally to realise the long-term benefits of energy efficient equipment.

Should the catering equipment industry being doing more to improve the clarity of the price versus performance issue?

Paul Anderson, managing director of Meiko UK, seems to think so. “The fact that some operators focus only on price is because they have become disillusioned with the tone of conversation from the catering equipment supply industry,” he suggests. “Improvements in energy efficiency are sometimes taken for granted, especially because there is confusion and a lack of understanding in what is being offered by manufacturers, who are generally trying to out-PR each other in terms of green credentials by making vague and unsubstantiated claims. If energy efficiency and value for money over the long term is critical, then the operator must ensure that a proper comparison of key values such as energy, water and chemicals consumption is taken of the competing suppliers.”

Tim Charlton, managing director of Euro Catering, says new innovations on the market are more energy efficient than ever before, but he accepts that it will take time to convert customers to a different way of thinking, even though he is increasingly seeing clients taking the subject seriously and building energy savings into their price considerations when carrying out full-scale commercial kitchen refurbishments.

“It is just a habitual thing,” he says. “Operators have been used to thinking about price alone and have not, for many years, had equipment available that could make an impact on energy costs. Additionally, while gas and electricity were reasonably cheap, there was no real catalyst for focusing on energy usage. Demonstrating corporate social responsibility through efficient energy usage is also a relatively new requirement for many establishments, so really the industry is still catching up with an ever-changing energy picture.”

There is a belief from within the industry that as the market matures, and more rigorous standards governing energy usage are introduced, the power consumption and sustainability of equipment will come to take a more elevated role in end-user purchasing decisions.

But Rees at HTG Trading says the industry might need to bide its time given current economic challenges. “In times of austerity, the green element never wins! When the economy is buoyant buyers can afford to be greener. Restaurants and hotels are responsive to their customers. Customers tend not to be focused on the green credentials of the cooking equipment, but rather on things like food miles, local produce and Fairtrade. As such they may be willing to pay more for locally-sourced food, but not for food cooked in an energy efficient way.”

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