A Complete Guide to Business Energy for Restaurants
Busy restaurants can use a lot of energy. When you consider the lighting and heating that are essential for creating an ambience, and the gas and electricity that are of course essential for cooking, the costs can soon add up. That’s why it’s so important to make sure you’re on the best deal, so you can keep your costs as low as possible.
How are your restaurant energy rates calculated?
The amount you pay for energy to run your restaurant can vary depending on a number of things, including:
- Your business’s credit rating - if suppliers think there’s a credit risk with your business, they may not offer you the most competitive rates
- The size of your business
- Your location - this can affect how much it costs suppliers to physically send energy to your premises
- Your business type - you might pay less if you’re a sole trader or a limited company, for example
- Your business sector
- How much energy your business uses each year
When you get your energy bill, most of the costs will be based on the amount of energy your restaurant has used. But these costs will also usually be included:
- Wholesale costs: the amount your supplier has to pay for the gas and electricity which they then sell on to you. These prices fluctuate depending on market activity, but if you’re on a fixed contract you’ll pay the same rate for the duration of your contract.
- Network costs: what your supplier has to pay to use the transmission and distribution networks to deliver energy from power stations to your premises.
- Environmental costs: suppliers have an obligation to contribute to certain environmental programmes enforced by the government, so these costs cover what they have to pay
- Operating costs: these cover what it costs your supplier to operate your account and keep it running smoothly
- Climate Change Levy (CCL): a tax on each unit of energy your business uses, designed to encourage businesses to become more energy efficient and reduce their carbon footprint. You won’t have to pay this if your business uses less than 33 kWh of electricity per day, or less than 145 kWh of gas per day.
- VAT: a tax charged on goods and services - depending on how much energy you use, you might be charged at the standard 20% rate or a reduced rate.
What is an average business electricity bill?
The amount you pay for your business electricity depends on your business’s location and your energy supplier, but these average amounts will give you a rough guide to what you can expect to pay:
|Business size||Average annual usage (kWh)||Price (per kWh)||Standing charge (daily)||Anual bill|
|Micro business||5,000 - 15,000||44.9p||95.0p||£4,837|
|Small business||15,000 - 25,000||40.7p||116.5p||£8,565|
|Medium business||25,000 - 50,000||34.6p||102.5p||£14,124|
Note: Rates may vary according to your meter type and business location. Current market volatility may also mean that the prices you’re quoted are different from the averages shown. The figures shown are the average unit rates and standing charges quoted by Bionic per business size from January 3 to January 6, 2023. Rates do not include any Energy Bill Relief Scheme discount.
How to make your restaurant more energy efficient
There are lots of ways to make your restaurant more energy efficient, and bring your business energy bills down.
Make sure you keep fridge doors closed whenever possible, and check that the seals on your fridges and cold rooms are intact. Defrost and clean your fridges regularly, and keep the condensers and evaporators clean. When you’re looking to buy a new refrigerator, check the energy rating - AA++ rated units are the cheapest to run.
A third of your energy cost is typically spent on heating and hot water, so it’s worth insulating your hot water pipes to make sure you’re not losing any heat. Check your water temperature is at 60C, as this keeps water hot and kills bacteria. Fix any leaking taps as quickly as possible, and consider swapping for spray water taps, as these use less water than conventional taps.
When it comes to heating and ventilating your restaurant, it’s important to get your systems serviced regularly to make sure they’re running as efficiently as possible. Consider turning your thermostats down to a comfortable level - you rarely need to use air conditioning below 24C. Switch off your kitchen hoods when they’re not needed, and match your heating timer to the times when the rooms are being used.
Don’t forget about lighting - simply replacing your traditional light bulbs with LED ones could reduce the electricity you use for lighting by as much as 80%. Encourage your staff to switch off lights when they’re not needed - installing movement sensors, time switches and daylight sensors will also help with this.
Call MoneySuperMarket today on 0800 088 6986 to find out how we can help to cut the energy bills at your restaurant. Or leave a few details at the top of the page and we’ll give you a call back.