We all know restaurant businesses operate on razor-thin margins. As a result, operators appropriately focus on product quality, guest satisfaction, and managing prime costs to survive. But I’d like us to think differently for a moment—not just for the sake of the bottom line, but for a larger purpose as well. And, in this particular case, better business can help contribute beyond our dining rooms and into the communities that support us.
Every restaurant uses an enormous amount of gas, electricity and water, not to mention construction materials for new units or remodels. What if we consider that our restaurants aren’t just in the food business but also in the energy consumption business? How can we make that business more efficient and effective?
At CapitalSpring, our entire portfolio is devoted to investments in the restaurant sector. And we remain committed to supporting smart business initiatives with all our portfolio partners. One of those partners is Shari’s Cafe & Pies, the largest full-service restaurant chain in the Pacific Northwest. Shari’s operates nearly 100 locations across six states 24/7, which means the lights are always on, the HVAC is always running and kitchen costs can run high.
As a result, Shari’s energy usage represents the third largest controllable cost for each of our locations. Rather than simply accepting those costs as a given, Shari’s management identified them as an area not only of improvement, but of potential transformation that could significantly improve the company’s bottom-line and brand positioning.
Working closely with CapitalSpring, Shari’s leadership team put together an aggressive strategic energy management program dubbed SWEEP (Shari’s Water/Energy Efficiency Program). Together, our goal was clear: to reduce energy costs and consumption without interfering with the guest experience.
We outlined a multi-pronged process, requiring buy-in at all levels of the organization:
AUDIT: dive deep into energy costs and understand what is used and consumed throughout the restaurant
IDENTIFY: find the opportunities for change and understand what each will involve and ultimately produce (and bring in experts who can guide the process forward)
IMPLEMENT: start with a single project to prove return-on-investment and then quickly build and act upon additional projects to sustain momentum
MEASURE: create systems that provide data and be willing to adjust approaches based on findings
In all, Shari’s implemented 14 SWEEP projects across multiple areas within the restaurant, including the following:
- We retrofitted our gas broilers (the first project implemented, and a quick source of improvement that proved the value of the SWEEP initiative).
- We installed automatic door closers and indoor/outdoor LED lights, delivering substantial electricity savings.
- We deployed heated dipper wells, which provided an enormous reduction in water usage and expense.
- We introduced demand-control ventilation systems into our kitchens, slowing down the systems when maximum usage isn’t required.
- We invested in additional energy-efficient equipment and management systems, all with the intent to reduce energy consumption without affecting the customer experience.
Beyond the ongoing saving associated with these initiatives, there were real monetary incentives available to support these types of projects. Working with energy consultants, we carefully identified utility rebates to maximize the return on investment. For several projects, we were able to save between 30 to 70 percent of the project costs by leveraging these rebates.
Perhaps most importantly, we directly engaged with the Shari’s employee base, training them on best practices and delivering regular feedback on the impact of the SWEEP initiatives. While the directive came from management, the goal was to bring employees into the mission directly and give them a sense of achievement as we began to move the energy needle in the right direction.
And these efforts were also communicated to the Shari’s customer base. As a family restaurant, Shari’s has a deep dedication to providing fresh food in a positive and warm atmosphere. This new initiative to reduce Shari’s energy footprint was something we were proud to share with diners, and they in turn were proud to support it. We communicated these initiatives with in-store signage, social media, local events and media, all of which emphasized Shari’s commitment to being a great neighbor to its surrounding communities.
The results have been nothing short of astounding. As a direct result from the SWEEP program, Shari’s has:
- Reduced electrical usage by more than 6 percent
- Cut gas usage by more than seven percent
- Generated 19 percent less waste
- Achieved water savings of over 37 percent across its portfolio relative to its 2012 baseline
The U.S. Department of Energy even recognized Shari’s for achieving water savings as a partner in the Better Buildings Challenge, a DOE program that works with market leaders to drive the acceleration of cost-effective and proven strategies to improve the energy efficiency of the nation’s buildings, manufacturing plants and multifamily housing.
These results have far exceeded our goals, but we’re not stopping there. We’re continuing to look for projects and technologies that can further reduce energy consumption. Going forward, our overall goals are to lower gas and electric consumption by 20 percent and water consumption by 35 percent.
In the end, I’m confident in our ability to make those goals a reality. It requires a combination of well-aligned stakeholders: a management team eager to innovate, partners to provide guidance and intelligence, a willingness to invest into positive transformation, etc. This may seem like a tall task, but we’ve done it with Shari’s and we’re bullish that others can too—for their communities and their own profitability.
Jim Balis leads CapitalSpring’s Strategic Operations Group, supporting due diligence, portfolio management, and industry knowledge building initiatives. Founded in 2005, CapitalSpring is a private investment firm focused exclusively on the restaurant industry. The firm currently manages assets of approximately $1.3 billion and has completed investments in over 50 different restaurant brands and more than 4,000 restaurant locations. CapitalSpring focuses on supporting proven restaurant operators with a range of structured credit and private equity solutions and has offices in Nashville, Los Angeles, Atlanta, and New York.