Business and Operations
What’s It Worth?
By Bakers Journal
By Bakers Journal
Looking at the life-cycle-costs of your appliances.
Unless you are a multi-millionaire or a lifelong pedestrian, you've noticed that gas prices are up at the pumps – Ouch! You’ve been paying for gas ever since the first day you drove that car off the lot, but this latest bump in fuel costs has probably refocused your attention to an important economic reality: the purchase price of your car was only a piece of what your car really costs you. Every time you get an oil change, new tires, a brake job, or a water pump, your cost of ownership goes up. It might take ten years before these routine fuel and maintenance costs equal the purchase price of the car, and yet, most people pay close attention to these expenses and are willing to chuck a vehicle that costs too much to operate.
Wondering how all this car talk relates to food service equipment? Are you sitting down?
A Big Difference
Here’s the big difference between your car and your kitchen: for many appliances, one year’s worth of fuel (electricity or natural gas) will cost as much as the appliance itself! Throw in a few service calls and any water and sewer charges, and you end up with a lifetime “cost-to-operate” that could be anywhere from one to 10 times the initial purchase price. Add these operating expenses to the purchase price and you begin to get an idea of the total cost of ownership or the “life-cycle-cost” of the appliance. Other expenses that you might take into account include frying oil, chemicals, any positive or negative affect the appliance will have on labour or food costs, and finally, disposal of the appliance when its time is through. A true life-cycle-cost model includes every cost associated with an appliance from “cradle to grave.” Is it practical or even possible for normal, sane, people to do a total life cycle cost analysis? No! But, it is possible to gather some of this information and something is better than nothing – especially when it comes time to make decisions. You’ll never be able to determine exactly what an appliance will cost you, but you can get an idea of one appliance’s cost relative to another and that’s when you start making informed decisions and saving money.
Where to Begin
You already know the purchase price of the appliance, so that part it easy. If you have any experience with appliances, then you can probably make an educated guess at a lifespan. Be general: for instance, the cheapest fryer might last you three to five years, while a more substantial model will last five to seven years. Remember, life cycle costing is a mixture of art, science, and plain old good judgment. Now it’s time to ask, “what is this appliance going to cost me every year in electricity and gas?” It’s a lot easier to get this answer for your automobile than your fryer, but don’t worry, there are some resources out there that can help.
Energy Info and Cost Calculators
There are a few of places that you can look to find out how much energy your appliance might use. If you are researching one of the Energy Star appliances – fryers, hot food holding cabinets, steamers, or reach-in refrigerators – then you can get energy and efficiency data at the Energy Star website: www.Energystar.gov. You will also find a simple life-cycle-cost calculator at this website that can help you determine the value of purchasing Energy Star Appliances. The second place you can look for appliance energy info is on the Food Service Technology Center’s website at www.Fishnick.com. The FSTC has an extensive library of published reports on appliance energy use and they are free. If you don’t see what you need, then go to the contacts page and drop an e-mail to one of the FSTC engineers. The FSTC website also includes several online life-cycle-cost calculators and more are being added all the time. The third place to look for information is with the manufacturers themselves. Many manufacturers now have detailed test data on their appliances and some even have test reports posted on their websites. One final tip: don’t use the nameplate BTU or kW rating of an appliance to estimate energy use – that’s a sure fire way to overestimate your operating cost.
The next big expense that you want to add to your cost model is maintenance. This is sometimes a hard number to generate but you can usually make a good estimate based on your experience and/or good record keeping. Make it a point to get as much useful information as possible from your service company. Document the annual cost to repair and maintain all of your appliances, drop it all into a spreadsheet and look for trends. After a couple of years you will have a database of maintenance costs and you can generate an “average annual maintenance cost” for each of your appliances. You will be able to quickly spot the high-maintenance items and, just like with you car, make an informed decision on whether to repair or replace.
Is This Really Worth It?
Perhaps this sounds like a lot of homework and for some small operators this kind of rigour is unnecessary but for most, gathering this useful information is not that difficult and it’s getting easier. In an industry where food and labour costs are tracked with exhaustive detail it only makes sense that fuel and maintenance be added to the list – especially since these items can cost so much more than the appliance itself. Don’t be intimidated; take it a step at a time, and remember that any reasonable life-cycle-cost analysis makes you smarter than the competition.
Ways to Save
1. Track Energy Use
“You cannot manage what you do not measure,” says Enbridge Gas Distribution’s Erica Lontec. She advises reviewing energy usage by comparing your energy consumption this year with last year’s numbers. Have you used more energy? If so, consider the possible causes. Can this be attributed to warmer or cooler temperatures? Have you added new equipment, hired more staff or increased your business space? If not, check your equipment to ensure it’s operating properly – it may require servicing.
2. Turn Things Off
Make sure your lights are turned off when a working area is not in use. Do the same with computers and other kitchen equipment. Use a timer for bathroom and kitchen exhaust fans. Lontec suggests setting up a schedule for employees, so they know who is responsible for checking on lights and equipment. She also points out that reducing preheating times for ovens, operating exhaust hoods only when necessary and turning down heating or air-conditioning can do a lot for reducing energy usage and bills.
3. Keep it Clean
“A routine maintenance schedule is essential for optimum equipment efficiency,” says Lontec. Make sure grease traps and ventilation equipment are frequently cleaned, check the coils on your fridge and freezer, check that all automatic controls are set and working properly, remove unnecessary light bulbs or switch to lower wattage bulbs, and make sure your water heater is not set higher than required by law.
Looking for help with reducing your energy usage? The Energy Management Services Directory is a searchable list of consultants, engineers and other professionals that can help organizations reduce, manage and measure their energy use. The website, offered by Natural Resources Canada's Office of Energy Efficiency (OEE), allows users to search for companies by city.
Go to oee.nrcan.gc.ca/providers to find an organization that may be able to help you.
These energy saving tips are offered by the Food Service Technology Center (FSTC), a food service resource center located in San Ramon, California, and funded by California utility ratepayers under the auspices of the California Public Utilities Commission. For more information on the FSTC, please visit the website at www.fishnick.com. This article first appeared in the August 2004 issue of the California Restaurant Association’s California Restaurant Bulletin.