How To Reduce Restaurant Overhead Through Monthly Utility Costs

11 Minutes Read

How to Reduce Restaurant Utility Costs: Know How Much is The Average Costs to Plan Smart Strategies to Save Money in 2024



Reducing the monthly utility costs in your restaurant can significantly improve your bottom line, boosting profitability and sustainability. According to the Department of Energy, reducing energy use can save money, increase energy security, and reduce pollution from non-renewable energy sources. This article aims to provide restaurant business owners with practical strategies to lower utility expenses and enhance profitability.

What is the average monthly utilities cost for a restaurant?

How Can Energy Audits Help in Reducing Restaurant Utility Costs?

What is an Energy Audit and How Can It Benefit Your Restaurant?

An energy audit is an in-depth assessment of your restaurant's energy use. It identifies areas where energy is wasted, enabling you to implement targeted strategies to lower your monthly utility bills. This can lead to increased profits by reducing variable costs like electricity and natural gas. Restaurants that spend on energy audits often see a significant reduction in their total energy costs.

Further reading: What is the Average Restaurant Profit Margin?

How to Conduct an Energy Audit for Your Restaurant?

  1. Hire a Professional: Professional auditors can offer comprehensive evaluations and tailored solutions. They provide detailed reports, identifying inefficient kitchen equipment and suggesting replacements with energy-efficient options.
  2. DIY Audit Tools: Online tools and resources guide you through inspecting equipment, analyzing energy bills, and identifying inefficiencies. This approach can be a small investment with a high return, especially for identifying quick ways to save on energy costs.

What are the Common Energy-Efficiency Measures for Restaurants?

  1. Upgrade Appliances: Invest in ENERGY STAR-certified kitchen appliances like dishwashers, fryers, and freezers. These appliances consume less energy and offer long-term savings.
  2. Optimize HVAC Systems: Properly maintaining and upgrading to high-efficiency HVAC units can reduce energy consumption and lower bills. Programmable thermostats can also lead to significant savings.
  3. Improve Insulation: Adequate insulation in your building reduces the load on heating and cooling systems, saving on both electric and gas bills.
  4. Switch to LED Lighting: Replacing incandescent and fluorescent bulbs with LED lighting can cut lighting costs significantly. LED bulbs use less energy and have a longer lifespan.

How Can Water Conservation Strategies Reduce Restaurant Costs?

What Water Conservation Techniques Can Be Implemented in Restaurants?

  1. Install Low-Flow Fixtures: Using low-flow faucets and spray valves reduces water use without impacting performance. This small investment can lead to substantial savings.
  2. Fix Leaks Promptly: Addressing even minor leaks can prevent significant water waste and reduce overall costs.
  3. Water-Efficient Dishwashers: New equipment, such as ENERGY STAR-certified dishwashers, uses less water per cycle, cutting water consumption and utility costs.
  4. Educate Staff: Encouraging staff to adopt water-saving habits ensures ongoing conservation. Training on proper equipment use and maintenance can also prevent unnecessary water waste.

How to Monitor and Control Water Usage in Your Restaurant?

  1. Install Water Meters: Tracking real-time water usage helps identify areas of waste and opportunities for savings. This tool can be beneficial for managing costs in a quick-service restaurant.
  2. Regular Monitoring: Consistent checks and maintenance ensure that water-saving measures are effective and that any issues are promptly addressed.
  3. Automated Systems: Implementing smart irrigation and automated faucets can help manage water use more efficiently, leading to reduced operating costs.

How Can You Optimize Heating and Cooling Systems to Lower Utility Bills?

What are the Best Practices for Maintaining HVAC Systems in Restaurants?

Regular maintenance of HVAC systems is essential for improving efficiency and reducing energy consumption. Here are some best practices:

  1. Clean Filters Regularly: Dirty filters force the system to work harder, consuming more energy. Replace or clean filters monthly.
  2. Check for Leaks: Inspect ducts and equipment for leaks, as they can lead to energy loss and higher bills.
  3. Ensure Proper Insulation: Proper insulation around ducts and in the building can significantly reduce heating and cooling costs.
  4. Schedule Professional Maintenance: Regular check-ups by a professional can prevent costly breakdowns, extend the system's lifespan, and ensure optimal performance.

How Can Programmable Thermostats Help in Reducing Energy Costs?

Programmable thermostats allow you to set specific temperatures for different times of the day, ensuring heating and cooling systems operate only when necessary. Benefits include:

  1. Energy Savings: By adjusting temperatures based on occupancy, you avoid unnecessary energy use, leading to significant savings.
  2. Custom Scheduling: Set different temperatures for opening hours, peak times, and non-operational hours, optimizing comfort and efficiency.
  3. Remote Control: Many programmable thermostats offer remote access, allowing you to adjust settings as needed from anywhere.

What Role Does Lighting Play in Reducing Utility Costs in Restaurants?

How to Choose Energy-Efficient Lighting for Your Restaurant?

Switching to LED lighting is a highly effective way to reduce energy consumption. Benefits of LEDs include:

  1. Lower Energy Use: LEDs consume significantly less energy compared to incandescent and fluorescent bulbs.
  2. Longer Lifespan: LEDs last longer, reducing the frequency and cost of replacements.
  3. Better Lighting Quality: LEDs provide superior light quality, enhancing the dining experience while saving on energy costs.

What are the Benefits of Using Smart Lighting Systems in Restaurants?

Smart lighting systems offer several advantages for reducing energy use:

  1. Occupancy Sensors: These sensors adjust brightness based on room occupancy, ensuring lights are only on when needed.
  2. Daylight Harvesting: Systems that adjust based on natural light levels help minimize artificial lighting use.
  3. Automated Controls: Scheduling lights to turn on and off automatically can prevent energy waste and lower utility bills.

How Does Efficient Bookkeeping, Accounting, and Tax Management Impact Utility Costs?

How Can Proper Bookkeeping Help in Monitoring and Reducing Utility Expenses?

Accurate bookkeeping is essential for tracking and managing utility expenses:

  1. Identify Trends: Monitoring utility bills over time helps identify patterns and anomalies in energy use.
  2. Implement Cost-Saving Measures: Detailed records enable you to pinpoint inefficiencies and apply targeted energy-saving strategies.
  3. Budget Allocation: Proper bookkeeping ensures resources are allocated efficiently, avoiding overspending.

Further reading: Important Tips For Managing a Restaurant Balance Sheet

What are the Tax Benefits Associated with Energy-Efficient Upgrades?

Investing in energy-efficient upgrades can provide substantial tax benefits:

  1. Tax Credits: Many energy-efficient improvements qualify for federal and state tax credits, reducing your tax liability.
  2. Deductions: Energy-saving investments, such as installing LED lighting or upgrading HVAC systems, can often be deducted from taxable income.
  3. Incentives: Research available incentives and incorporate them into financial planning to lower the overall cost of implementing energy-saving measures.

What Tax Incentives Are Available for Energy-Efficient Upgrades in Restaurants?

How Can Energy-Efficient Upgrades Reduce Your Tax Liability?

Energy-efficient upgrades can qualify for federal and state tax credits, reducing your tax liability and overall costs. Examples include:

  • Federal Tax Credits: The Energy-Efficient Commercial Buildings Deduction (Section 179D) allows businesses to claim deductions for energy-efficient improvements.
  • State Incentives: Many states offer additional credits and rebates for installing energy-efficient HVAC systems, LED lighting, and kitchen equipment.
  • Local Utility Rebates: Check with your local utility providers for rebates on ENERGY STAR certified appliances and other energy-saving products.

What is The Average Restaurant Utilities Cost?

  • Electricity: $2.90/sq ft/year translates to $2.90 * 3,000 sq ft / 12 months = $725/month
  • Natural Gas: $0.85/sq ft/year translates to $0.85 * 3,000 sq ft / 12 months = $213/month
  • Total Estimated Monthly Utility Cost: $725 (electricity) + $213 (natural gas) = $938

This is a rough estimate. Your actual costs could be higher or lower depending on factors such as location, equipment, and usage.

What are Tips for Reducing Restaurant Overhead Through Monthly Utility Costs?

  • Staff Training: Train staff to use pre-rinse spray techniques to clean dishes with less water, reducing water costs and food costs.
  • Embrace Daylight: Open blinds during peak hours to save on lighting costs by using natural light.
  • Smart Dishwashers & Scheduling: Invest in dishwashers with water-saving features and schedule water-intensive tasks during off-peak hours to reduce costs.
  • Leak Annihilation: Fix leaks promptly as every drop adds to your bill and affects your food costs.
  • Phantom Power Crushers: Use smart power strips to eliminate standby energy drain from unused equipment, reducing your electricity costs.

Key Takeaways

  1. Energy-Efficient Appliances: Invest in appliances that typically save you a percentage on utility bills.
  2. LED Lighting: Switch to LED lighting to reduce electricity costs, every penny counts.
  3. Regular Maintenance: Perform regular maintenance on equipment to achieve optimal performance and save dollars.
  4. Smart Thermostats: Use smart thermostats, which can’t require constant adjustment, to manage heating and cooling efficiently.
  5. Water Conservation: Implement water-saving measures in the kitchen to notice a reduction in water bills.
  6. Optimize Cooking Practices: Train cooks to follow energy-saving tips to reduce gas and electricity usage in the kitchen.
  7. Menu Efficiency: Design a menu that requires less cooking time, which saves energy and reduces utility costs.
  8. Monitor Usage: Regularly check utility usage on your website or utility provider's site to keep an eye on patterns and identify points where you can cut costs.

How can Taxfyle help?

Finding an accountant to manage your bookkeeping and file taxes is a big decision. Luckily, you don't have to handle the search on your own.

At Taxfyle, we connect small businesses with licensed, experienced CPAs or EAs in the US. We handle the hard part of finding the right tax professional by matching you with a Pro who has the right experience to meet your unique needs and will manage your bookkeeping and file taxes for you.

Legal Disclaimer

Tickmark, Inc. and its affiliates do not provide legal, tax or accounting advice. The information provided on this website does not, and is not intended to, constitute legal, tax or accounting advice or recommendations. All information prepared on this site is for informational purposes only, and should not be relied on for legal, tax or accounting advice. You should consult your own legal, tax or accounting advisors before engaging in any transaction. The content on this website is provided “as is;” no representations are made that the content is error-free.

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June 12, 2024


Antonio Del Cueto, CPA

Antonio Del Cueto, CPA


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