PUBS ARE being advised to focus their efforts on energy reductions rather than selling more beer if they want profits to rise.
A little healthy competition never hurt anyone, which is why a new benchmarking scheme to improve energy efficiency across the hospitality sector comes with some big ambitions.
Launched at the end of April, the initiative comes from the Hospitality Carbon Reduction Forum. Boasting 80% of managed restaurant and pub outlets in its membership, the forum has been working with consultants at Carbon Statement to better understand the relationship between energy use and profitability.
The first set of results has provided some fascinating insights – not least the finding that the difference between the best and worst performing companies equates to a 2% gap in operating margins. In fact, if the entire sector performed as well as the leading chain in terms of energy use and efficiency it would represent a £100m increase in profits. That’s the same as selling another 250m pints.
Carbon Statement’s Peter Charlesworth heads the project. He says it was set up with this change of mindset at its heart – to give energy managers in the sector hard figures to show the difference energy efficiency can make compared with, say, chasing more customers and selling more pints.
“Energy use is being treated ever more seriously at board level as an opportunity to reduce profit erosion and increase profit margins,” he says. “It’s moved from a position of fourth of fifth on the priority list for these businesses to number two after staffing costs.”
The data has helped thrust the issue up the agenda. Each member has received a detailed appraisal of where they stand in terms of energy cost per pound of turnover, energy investment and energy use per site. In each area they are positioned against everybody else in the sector, though the names of other companies have been removed.
“It has been a great tool to help the sector understand the areas where they are behind the competition. Every company knows that they cannot afford to become uncompetitive,” Charlesworth adds.
The forum also offers an opportunity to share best practice. Chris George, the head of energy and environment at the Whitbread Group, explains: “A lot of progressive work is being done by restaurant groups to reduce energy wastage without affecting the customer experience, but as a sector we are still fragmented in our approaches, ways of working and reduction programmes – there’s scope to collaborate even more to share best practice to lead our sector. That is why the forum is a great catalyst to leverage productive change.”
One of the forum’s members, who wished to remain anonymous, says the benchmark report he’s got has been a “really useful internal communications tool”. He says: “When the board asks me why a competitor is saving X times more than us through its new energy initiatives I can now show them the report I’ve got indicating that it’s because they have invested X times more than us. It’s a great way to keep track of the competition and the benchmarking helps take things to the next stage.”
Carbon Statement’s director, Mark Chapman, is hopeful that being able to see where the competition is on energy will drive change across the sector. A large number of forum members have not invested in energy efficiency in the past three years and this could leave them behind the competition.
“Too many companies are wasting hard-earned profits by not taking energy efficiency seriously. The leading companies that prioritise and implement optimisation initiatives invest up to 10% of their annual energy spend every year – and are seeing results.”