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It can be challenging for any business to create an effective energy strategy

It is even more difficult when you're tasked with implementing the energy strategy for one of the most popular and successful quick serve restaurant chains with 600 restaurants across southern California.

While your business may or may not share the size, scope or menu of this global restaurant chain, the key ingredients of their energy strategy add up to a recipe for success for any business: proactively manage price risks, invest in energy efficiency and leverage opportunities to work with a leading retail energy supplier.

 

Getting ahead of price risks with a layered energy procurement solution

"Our strategy is to get the lowest achievable price while mitigating risk and maintaining price stability," says the company's energy team lead for southern California.

However, managing risk for 600 restaurants is easier said than done, especially if there is a significant supply or demand event that impacts energy prices.

“Back in 2005, energy prices were going through the ceiling because of Hurricanes Katrina and Rita,” he says. “The fixed price was enormous, so it didn't make sense for us to continue with a fixed price."

Hurricanes Katrina and Rita wreaked havoc on U.S. oil refining and production infrastructure in the Gulf of Mexico. In fact, with several large production facilities offline, oil prices topped $70/barrel until then-President Bush ordered the release of 30 million gallons from the nation's Strategic Petroleum Reserve. The impact of the hurricanes on energy prices led the company to begin thinking more "outside-the-box" with energy procurement.

"We decided to go on the PowerPortfolio® product, which gave us the ability to actively manage energy pricing for our short-term and long-term strategies," he explains.

By teaming up with Direct Energy Business on PowerPortfolio, the company gained access to an industry-leading group of energy professionals, a customized energy strategy, as well as expert guidance and reporting to better inform decisions on flat block purchases and variable, market-based purchases.

"We have regular calls with Direct Energy Business and they give us the forecast and suggestions on where they believe we should be and when we should be buying in advance."

 

Boosting energy efficiency across all restaurant locations

One of the most cost-effective and surefire ways to reduce energy bills for your business is to strategically improve its energy efficiency, which is especially important for restaurants.

The company's energy committee in California set an ambitious target of $1,500 in annual energy savings for each restaurant location and honed in on two proven energy efficiency opportunities in support of that mission: upgrading to more energy efficient lighting (such as LEDs) and switching to more efficient cooking equipment.

"Lighting is a huge savings opportunity for our restaurants," says the company's energy team lead.

LED upgrades represent a huge savings opportunity not only for restaurants, but all U.S. homes and businesses. In fact, the U.S. Department of Energy has identified LED lighting as the nation's largest energy savings opportunity, estimating that LEDs could save a whopping 348 terrawatt-hours of electricity by 2027, which is the annual energy equivalent of 44 power plants and total savings of more than $30 billion.

"We are also always looking at the cooking equipment and, if it's cost-effective, switch to newer, more efficient equipment," he says.

The company has typically focused on appliances with the highest energy usage in their kitchens, such as toasters, grills and refrigeration. The U.S. Small Business Administration has estimated that ENERGY STAR-certified refrigerators and freezers can save more than 45 percent of the energy used by conventional models, which translates to yearly savings of about $140 for refrigerators and $100 for freezers. ENERGY STAR-certified hot food holding cabinets can also unlock savings upwards of $280 per year.

Regardless of the energy efficiency improvement, energy savings add up over the lifetime of the equipment, especially across 600 restaurant locations.

 

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Tapping into California’s Direct Access energy program

Like so many other energy success stories, this quick serve restaurant brand has leveraged the opportunity to switch from the default utility rate to a competitive retail energy supplier for lower energy costs, best-in-class customer service and access to cutting-edge technology and renewable energy options.

How is the restaurant chain able to work with Direct Energy Business in southern California? Through the Golden State's Direct Access program.

In California, the Direct Access program allows a limited number of commercial and industrial customers to purchase electricity from a competitive energy supplier instead of their default utility. Given the popularity of the program, the California Public Utilities Commission recently approved a proposal to increase the cap on Direct Access from 24.8 terrawatt-hours/year to 28.8 terrawatt-hours.

Of course, there are some notable caveats. For instance, with a cap on the amount of load served through the Direct Access program, businesses are required to apply and are selected via lottery. The cap on the amount of allowable load has limited the restaurant on the Direct Access program to about 40 locations.

"Getting different stores onto the program is a challenge," says the franchise's energy team lead. "But our relationship with Direct Energy Business is fantastic and has worked out great."

There are more opportunities with the Direct Access program – both for this quick serve restaurant chain and other California businesses – on the horizon. If you manage a business located in California, and want the power to choose your energy supplier, you can apply for the Direct Access program beginning in June 2020. We stand ready to help your business every step along the way.

 

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