FSR May 2023

Your Take BY ANDREA WILKINS

Controlling Your Energy Costs Here’s how to take

RESTAURATEURS CAN KEEP THE LIGHTS ON WITHOUT BREAKING THE BANK BY SWITCHING TO EFFICIENT LED LIGHTING, WHICH CONSUMES UP TO 90% LESS ENERGY.

advantage of the wild energy market and add some certainty into your restaurant operating budget. IT’S NOT JUST EGGS. Rising infla tion has affected the price of nearly everything in the last year, from meat and alcohol to airfare. (Though, eggs are probably most notable; in January, the price of eggs was more than 70 percent higher than a year prior.) Restaurant and hospitality profes sionals know that fluctuating prices are simply part of doing business, and that these changes are often out of their con trol. But there’s one budget line item you can control: your energy spend. As with the price of other commodi ties, energy prices fluctuate. Lately, these markets have been nothing short of vol atile. This matters because energy spend makes up 3-5 percent of the average res taurant’s operating costs. In a volatile energy market, a restau rant business is going to benefit most from a proactive approach. Here are some of the reasons behind recent price fluctu ations, and tips for how restaurants can have more control over their energy spend.

tility of 2022 continue, or was it a fluke? If you’re responsible for a restaurant’s energy decisions, you may be wondering if the best strategy is to wait for prices to drop again or to renew your contract before energy prices rise again. While we can’t see into the future and can’t say for sure when higher prices will return, many in the energy industry believe that market volatility is here to stay. This is due to factors that include ever-rising energy demand, increasing LNG exports, and the broader electrifi cation of things like vehicles, as well as heating and cooling. According to the World Bank, global natural gas and coal prices are expected to drop overall in 2023 after hitting “In a volatile energy market, a restaurant business is going to benefit most from a proactive approach.”

per MMBtu. (MMBtu is the acronym for Metric Million British Thermal Unit, a standard unit of measurement of nat ural gas. You’ll often see this used in updates on the price of energy.) Looking at natural gas prices over the last year, the sharp dips and rises were due to several factors, including the extended, unplanned closure of a lique fied natural gas (lng) processing plant in June. A lack of severe winter weather resulted in energy prices dropping even further in recent months. Though this is always a possibility, it was not expected. Taking advantage of a dip in the market The price of natural gas is currently sit ting at an extreme low compared to where it was a year ago. But what does this mean for the market going forward and for your restaurant? Will the vola

Understanding energy market volatility

The price of natural gas, which influences the price of power, more than doubled in the last half of 2022. In fact, twice last year, energy reached almost $10

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MAY 2023