INDUSTRY DEBATE: The hidden costs of your kitchens

The Restaurant Group development kitchen

The capital cost of developing and equipping a kitchen is only half the story for operators. Often the real expense comes from what happens to that kitchen over its lifetime — how it is managed, the efficiency of the equipment, the behaviour of staff and numerous other variables. FEJ editor Andrew Seymour chaired a panel session with leading experts to discuss the hidden costs hitting kitchen operators and how to lower them.Hidden costs of kitchens panel

What are the main operational cost considerations that you need to take into account when developing and operating commercial kitchens?

Paul Dickinson: The key thing when you build a kitchen is that you have got to think about the long term. You can’t design a kitchen that is going to last five years — we look at a 12-year programme for everything we do. Servicing is the new warranty, so with the equipment you buy you have got to make sure that it is going to be around for the long term. With our cooking suites, if there is an issue it is either fixed or replaced within 24 hours. There is no knock-on effect to the business, and that is what the chefs want to see. After that it is about the training, so we empower all of our supplier partners to come in and train as soon as each new kitchen is signed off and then we keep on top of that training schedule over the following 12 months and continue it. That is the key thing — engaging with the staff to make sure they understand it, but also that they can quantify something and know what to do.

Simon, what’s your view on that? I know in your former role at Premier Inn you were involved in a large Rational roll-out. How much work went into understanding running costs prior to that project?

Simon Lee: One of the key things we were looking at was the amount of labour each kitchen needed to operate. We came from an estate which was very mixed in terms of there being a lot of acquisitions and a lot of historical sites with very different types of kitchen — some traditional, some linear — and we really looked at how we could make that kitchen much more efficient from a labour point of view so that people weren’t running backwards and forwards, and that they were where they needed to be on the cookline most of the time. We took out the majority of traditional equipment, which was consuming a lot of energy, and installed much more efficient equipment, creating a nicer environment in which to work.

How much emphasis do you place on the lifecycle costs of catering equipment?   

Simon Lee: When we put the combi ovens in we probably didn’t care as much for the actual kitchen itself as we should have, so we were getting lots of out-of-warranty call-outs and constantly sending cost out of the business to put things right that should never have gone wrong in the first place; simple things like door seals — stuff that should be looked after and maintained or replaced in-house. I think it shocked us a little bit how much it was costing in terms of repairs. So we made a point of going back and educating the teams, re-engaging them with what they were doing and really making sure they understood how to use the equipment. That led to a massive reduction in terms of warranty call-outs and cost savings.

I think one of the key things is building the proactive repair cost into a piece of efficient kit that you are going to buy, so that you can weigh it all up, see the saving and then manage that saving over time”

What do you regard as the single biggest hidden cost in a kitchen these days?

Fuller’s has tripled its budget for kitchens after seeing the benefits of specifying better performing equipment.

Simon Lee: In terms of hidden cost it would be the energy. If you go into a traditional kitchen with lots of traditional kit, such as chargrills and fryers, or kit that is older in age, most of that heat is going up though the roof via the extraction and you have to have massive extractors on the roof pulling that heat out to keep the environment workable. Teams historically come in, switch the equipment on and don’t actually use it for three or four hours so you’ll go in and see about four gas rings burning when they don’t need to be on. So one of the things we did was take away those traditional bits of kit like gas burners and replace them with induction. You put the pan on, it comes on, you take the pan off, it goes off. And if the pan boils dry, it stops. So we found that we didn’t install gas in kitchen after that, it was all electric.

Paul Dickinson: On the induction side we have got a lot of listed buildings so we have some tasking of getting enough electric in, but a lot of it is about the management and training. I have 964 chefs currently, but 190 head chefs, and they all attend a cooking session every other month and in that session it is not about how you cook a dish but it is around the management of the kit. Fridge seals or door deals are the number one repair, so you need to talk them through it, “don’t slam the doors” — it is just reiterating the fact that if you have got a great kitchen, look after it. In a kitchen it can be very military-like and in the military they are very disciplined, they look after each other and they look after their tools. So it is just about bringing a bit of team love to the kitchen. But it has worked and we have seen a huge reduction in reactive repairs through designing better kitchen environments. Training is also paramount, and if you don’t get that training you can see a spike straight away.

Carbon Trust research shows that operators could make savings of up to 30% a year — the equivalent of £250m — through actions on energy efficiency. How can operators unlock this?

Dominic Burbidge: It is worth having a bit of context here because what we have seen is that a typical F&B business spends about 5% of its turnover on energy and half of that is actually in the kitchens. Through the work that we have done with the likes of CESA and CEDA we have identified that through about five different areas you can cut costs by about 30%, so there is a massive prize to be had. If you look at the range of different F&B businesses out there this can increase your profit before tax by about 5% to 7% — just through having a concerted effort and looking at what’s happening in the kitchen. That 30% saving is broadly split between menu complexity, kitchen design and lay-out, equipment procurement and then operation and maintenance. Each one of those could deliver 10% to 15% savings.

Which one of those areas would you say is the most significant?

Dominic Burbridge: One of the biggest areas is around equipment procurement. Broadly speaking we did some work with Mitchells & Butler and if you take a typical kitchen template in their Vintage Inns, they probably spent about £60,000 on equipment and had running costs of £30,000 a year. At a lifecycle of seven to 10 years, your running costs are five times more than your capital costs, so the real message to get across is that whenever you are purchasing new equipment buy the most energy efficient equipment you can afford for that scenario. The top-of-the-range energy efficient equipment can save anything from 15% to 40%. We did some work with Winterhalter and their ClimatePlus warewasher is 40% more efficient than their standard warewasher in the same range and that gives a simple payback of less than two years.

If you take a typical kitchen template in M&B’s Vintage Inns, they probably spent about £60,000 on equipment and had running costs of £30,000 a year. At a lifecycle of seven to 10 years the running costs are five times more than the capital costs”

Are there enough tools available for operators to be able to exploit the potential energy savings available?

Dominic Burbridge: It is kind of interesting because even before you get to the tools and solutions stage, I think there is a lack of awareness at the board level or management level that this is a big opportunity. And so until you are giving direction to your buyers, or to your menu development guys, then you are not really going to get so much change. I think it is down to a couple of inspired individuals that get it, and that is how change happens. We are definitely seeing in the market that there are some hospitality companies that get it and they are doing it and it is baked into their business, but there is also a long tale of organisations that really haven’t got their head around this.

A typical F&B business will spend about 5% of its turnover on energy, with half of it coming from the kitchen.

Is there a direct correlation between the price or specification of a piece of equipment and the cost of actually running and owning it?

Paul Dickinson: I think one of the key things is building the proactive repair cost into a piece of efficient kit that you are going to buy, so that you can weigh it all up, see the saving and then manage that saving over time. And that is where we have seen the gain. We have taken it to board level and when a new kitchen is signed off I take the whole board to see it. They see the chef smiling and all of this beautiful stainless steel and you know that it is going to be like that in three years’ time, five years and so forth. So take people with you and show them the little nooks and crannies and the improvements that can be made for a margin of the cost in the long term. Five years ago I had £50,000 to design a kitchen. Now I have the best part of £150,000 upwards. We use Rational, Ambach, vac pac machines, water baths, Vita-Preps — these are fully kitted operations. When the chefs see this kit it is like Christmas day-in and day-out, so you have just got to keep going with the proactive repair, the training and taking people with you. You don’t always get it right, but when you do it is really exciting.

Advancements in new equipment and legislation governing energy labelling are just two of the factors shaping attitudes towards energy efficiency. With that in mind, do you see the hidden costs of kitchens tomorrow being different to what they are today?

Simon Lee: I think we are seeing costs coming down and one of the key reasons for this is that we don’t use as much space anymore. So we put together a better kitchen, with less equipment, less extraction, more energy efficient equipment and we just don’t use as much room. That space can then be handed back to the business to be used in other ways.

Dominic Burbridge: There is a lot of change happening. For years there has been a lack of labelling and that really hampers buyers who are trying to make informed purchasing decisions. That is starting to change and in the short term we are actually helping organisations substantiate their environmental claims. There is a lot of equipment out there but if you are going to spend a lot of money then you want to have confidence you are buying the right equipment, so the big trend that I am seeing is that manufacturers are getting much better at communicating the energy or environmental credentials of their products, and that is helping buyers make more informed purchasing decisions, which can only be good.

Paul Dickinson: We are always reviewing our kitchens and we always see an improvement in energy used on prior year, but still with every kitchen we get hold of as much information as we can before we commit to an installation. We will always look at what’s changed in the market and what else we can get our hands on because it is about making gains. But there has been a huge improvement from four years ago to where we are now, and even planning for next year’s roll-out we are already looking at new pieces of kit with our current suppliers — but tasking them to come back to us with it rather than us going out and searching for it. A lot of companies are becoming more service driven rather than just, ‘look at this is a great piece of kit’. It is selling it as a package. And it is like buying a house, it’s for the long term.

This panel session took place at the recent Commercial Kitchen show in Birmingham. www.commercialkitchenshow.co.uk

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