Commercial, Energy Efficiency, Energy Procurement - October 1, 2018 - By James McPhail, Zen Ecosystems
Building consistent savings at franchises through energy management
Managing a franchise is no easy feat. The balance of facility management needs and customer interest is particularly challenging for multi-unit franchise managers. Both cash and time often run low. To protect bottom lines, busy franchisees navigate obstacles related to high startup costs and limited labor bandwidth. From development to permitting payments, all kinds of professional fees can quickly reduce revenue streams, and fluctuating electricity prices and high energy usage only create additional concerns for business owners.
Commercial buildings consume a significant amount of energy, and franchise owners have an additional incentive to cut back on usage due to slim margins within the industry. The top-ranking retail, restaurant, and hotel franchises are household names, but the net profits of these particular franchise types range from just 3.9 to 10.5 percent. Consider the amount of electricity (and money) drained during operations: energy is the fourth largest in-store operating cost for U.S. retailers; restaurants use about 2.5 times more energy per square foot than other commercial buildings, and HVAC and lighting needs are responsible for up to 45 percent of a hotel’s energy use. Significant business gains can result from decreasing these utility expenses and improving sustainability efforts. Business owners across sectors can monitor energy-intensive offenders like lighting, ventilation and cooling technologies – without pulling time and attention away from other high priorities.
Simplicity is key
Identifying and reducing energy resources shaves off unnecessary waste and improves the experience of both employees and customers. Intelligent energy management systems (EMS) can be a simple and approachable method for facility managers. Other building improvement strategies like building automation systems tend to be pricey and disrupt building operations heavy retrofitting, and often times, franchise managers are restricted by building codes that enforce consistent guidelines.
EMS provides managers with a more cost-effective method for controlling energy usage rates. Cloud-based EMS platforms provide potential savings, manage energy with easy access to automated insights and controls, and require minimal operational disruptions. Real-time data can provide more insight into a facility’s energy use and can offer managers information to better understand energy usage patterns. EMS also lowers electricity costs through robust controls for HVAC and other energy-related technologies.
Scaling savings potential
Among the many benefits offered by EMS, these tools can increase site profitability by automatically controlling energy usage, and savings add up steadily. For example, retailers that are able to reduce energy costs by 20 percent can achieve the same level of savings as a 5 percent sales increase. In the restaurant context, a $1 reduction in energy costs is equivalent to $12.50 in sales at an 8 percent profit margin. For hotel franchises, reducing energy use by 10 percent can have the same bottom line impact as boosting the average room rate by $1.35 in full-service hotels and by 62 cents in limited-service hotels.
And as franchise owners look to scale their operations, they need to promote growth in a way that won’t drastically multiply costs. Owners of these systems only have to pay a small fee to receive a fast return-on-investment within months. In the world of slim margins, high electricity costs and growing competition, every advantage can make a difference.
Enhancing employee and facility productivity
Beyond immediate cost savings, installing an EMS can also improve employee productivity and equipment health. Cloud-based platforms allow managers to spend less time and resources around maintenance efforts. Automated energy monitoring can prevent the overuse of devices like HVAC units. HVAC systems are large investments for commercial businesses – instead of waiting for them to break or replacing systems based on their age, the advanced temperature sensors of an EMS can identify possible hardware issues well before the units malfunction, preventing any surprise budget spikes.
Additionally, franchise owners can control multiple sites in different locations — adjustments can be made from the comfort of a desktop or another internet connected device. Operations managers can also schedule temperature settings to change over time or during off hours -- for instance, by turning down the heat overnight when no one is in the building. Building operators can even build in exceptions for employees to make their own thermostat adjustments on-site, but only within a certain range. This flexibility creates a customizable environment, and remote connectivity reduces the need for travel to implement it or the use of lockboxes to prevent tampering. Ultimately the facility and the employees have increased productivity rates through better-managed bandwidths. These indirect savings from energy management tools flow back into the bottom line.
EMS are a quick and simple way to reduce energy consumption in franchise-owned buildings. Operations of all sizes can take advantage of intelligent EMS. Smart energy management is a great strategy for businesses looking to cut energy waste and make on the fly adjustments and can be beneficial for franchises. Savings earned from tech-enabled programs can be used to enhance customer service, employee productivity, and overall profit margins.
James McPhail is a seasoned leader in the energy industry who has developed business strategies for energy management and Internet of Things in markets worldwide. As CEO of Zen Ecosystems, James builds the business and channels relationships with commercial customers, utility providers, resellers and technology partners. Prior to Zen Ecosystems, James was executive vice president of sales at REGEN/Encycle, with a customer base that now includes some of the world’s largest commercial businesses, and led Western U.S. sales at EnerNOC, a recognized leader in demand response (DR).