How to save your business from soaring electricity costs
Using a real-life example, appliance supplier Caterboss has calculated the amount retailers could potentially save by switching to better energy efficient rated fridges
3 November 2022 | 0
Warren Buffet once said that he would have no problem taking $1,000,000 and achieving a 50% annual return on his investment, which would earn him $500,000 profit per annum before taxes. This might seem like a mind boggling return on investment to be able to achieve, and it is; even the brightest minds in finance would struggle to achieve a return like this. Most investors struggle to make a profit of 7% a year on their investments, which wont even cancel out the effects of today’s inflation rates. Most pension funds do well to return 5% per year, before fees.
However, Caterboss believes that the average business owner, with no financial investment knowledge can make a 50% average return on their investment, over the next three years.
The harsh reality facing Irish businesses today is that most will be doing very well to keep their doors open over the next 12 months, as sky rocketing electricity costs and energy bills sap the cashflow, savings and future profits from every business in the country.
At the core of every business which trades in food and drink, is a range of refrigerated products with specific uses. Your local grocery store will have display fridges that stock everything from bottles of Coca-Cola to fresh meat and milk. Your local pub will have a host of bottle coolers to keep the beer chilled. Restaurants will have stainless steel fridges, commercial chest freezers and counter fridges to stock their foods and prep their dishes.
These refrigerated products all consume electricity and unless you specifically bought an energy efficient rated machine, you will be shocked to learn the annual consumption of these machines. A lot of business owners probably inherited the equipment they use in the premises they now own or lease and the older the piece of equipment, the less efficient it will be in terms of electricity consumption. Not replacing the equipment or purchasing the cheapest option in the catalogue might have been a reasonably sound business decision four or five years ago when weighing up the cost benefit of doing so, but those days of cheap energy are long gone and the very machines and equipment that you depend on to run your business on a daily basis could now be bleeding your bank account dry.
To give some insight into the kind of numbers referred to, Caterboss provides a recent example:
Pat has a number of Multideck Fridges in his shop. We all know what they look like, we just never knew the name of them. They are the fridges that you take your cans of 7up or bottles of orange from every time you walk into a filling station or local store. These are open fronted fridges and they are the biggest offenders in the game. The open front on the fridge basically means it’s trying to cool the shop, not just products stocked in it. Pat’s Multideck Fridge is four years old; he installed it before Covid after its predecessor failed one morning after 12 years of good service. Pat bought a reasonably well-known brand and paid good money for it. What he didn’t pay attention to when he bought it was the energy rating, which in this case, happens to be an F rating. It’s a 12ft fridge and it’s annual electrical consumption is approximately 31,738kwH. To the uninitiated, that’s about €15,869+VAT based on the most recent commercial bill.
Pat has six of these units on his shop floor. If he upgrades to a more energy efficient rated fridge with doors, let’s not get too wild and say a Galaxy Multideck C Rated appliance that uses about 7,000kwH per annum, he would save his business in or around €74,214 a year in electricity costs, or €742,140 over the expected life of the fridges. That’s a lot of cans of coke. And that’s just the open fronted fridges Pat has. That’s not including the ice-cream display fridges, the deli counter, the salad prep fridge in the deli area, the frozen foods cabinets at the back of the shop, and so on. This is a real world example from a real customer, this is not a hypothetical situation.
To replace one of these fridges would cost Pat approximately €13,000+VAT and in turn he can save €12,000+VAT in electricity costs per year. And those energy savings will continue year on year for the rest of the operating life of the fridge.
So using Pat as an example, Caterboss has shown how you can make an investment into your business and make an average return on that investment of over 50% over the next three years. Putting yourself in the same league as Warren Buffet in terms of investment returns. If our financial adviser or bank manager came to us in the morning and said “Give me €13,000 today and I’ll give you back €44,000 at the end of year three”, we wouldn’t think twice about that investment.
The message here is that by acting now and investing some of your hard earned capital into better energy rated refrigeration equipment, instead of handing over all that capital to your electricity supplier over the next however many months, you can in fact give your business a fighting chance against the soaring cost of electricity that is forcing many business owners to consider closing their doors.
You can call Caterboss on 01-9011 681 and a member of the team will be delighted to assist and advise you on how and where we can help you to save a huge amount of money on electricity outgoings. We can even arrange a free site visit to assess your current consumption and help identify where you can make the most savings.
Contact Caterboss on 01-9011 681 or visit www.caterboss.ie
*(All calculations are based on a commercial rate of electricity of €0.50 per kwh)